Home > Uncategorized > Reliance on Property Taxes for Services and Schools + Poor Assessment Practices = Even MORE Income Disparity

Reliance on Property Taxes for Services and Schools + Poor Assessment Practices = Even MORE Income Disparity

April 5, 2021

Tax policy is by and large both boring and arcane, but its impact on inequality is powerful. The easy part of understanding tax policy is that there are two forms of taxation: progressive and regressive. Progressive taxes tend to redistribute money from wealthier citizens to needier ones while regressive taxes do the opposite. Income taxes, particularly those that have higher rates for higher incomes, are the best in terms of addressing inequality. Sales taxes tend to be regressive since most citizens rely on a common market basket of goods that have a relatively constant value. If your income is $30,000 per year, for example, the amount of toilet paper you need to purchase is identical to the amount a billionaire spends, so a tax on that product requires a bigger chunk of the lower income individual than the billionaire. This means that lower income people pay a proportionately higher percentage of their income on taxes than a higher income individual. Property tax is also regressive. Everyone needs shelter and the proportion on one’s income that covers the cost of that shelter decreases as one becomes more affluent. Moreover, as the article by the editorial board that appeared in yesterday’s NYTimes points out, many variables go into assessment and if assessment— the key variable in determining property tax rates— is done poorly or infrequently the burden of property taxes falls more heavily on the less affluent homeowners.

Connecting dots on taxation is difficult… but the editorial board did a good job of illustrating how the combination of shoddy assessments compound the regressive impact of property taxes and offered illustrations of how relatively easy it is to fix the problem. The article concludes with this:

The inequities that researchers have put on public display are galling not just because they have come at the expense of those who can least afford it, but because it’s clear that it would be relatively easy for local governments to address these problems.

Equitable assessment is possible. Anything less is unacceptable.

No one wants to pay higher taxes and everyone wants someone else to pay for necessities like roads, trash collection, public transportation, and schools. And when citizens perceive that the tax structures are unfair, it is even more difficult to get support for higher taxes. The bottom line: if we want to tax our citizens at the same level as those citizens in other developed nations are taxed and get the same kinds of services those citizens receive from the government, we need to improve the fairness of our tax system.

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