What would happen if we shifted away from income tax to property taxes and import tariffs at the federal level? (adjusted as needed to be "revenue neutral")
Businesses with small footprints would see a tax benefit. Businesses would probably start implementing mandatory work from home policies and reduce their office space. Most businesses rent so property holders would feel the tax burden and rents would go up significantly. Businesses would also start moving to locations with cheaper mileage rates. Businesses would start downsizing their office spaces at the detriment of employees. Businesses have already started the practice of selling their property assets and then renting them for other reasons, this would only increase. In the end you'd be penalizing businesses that need store fronts to operate and encouraging more teleworking.
Tariffs would only affect a small portion of business and you might see an increase in manufacturing in the US but that would depend on the property taxes.
With both you'd be missing large business segments. Service providers that don't need physical locations or produce products would have to pay no taxes? That's basically a potential free ride for any call center operator, software development firm, or any other company that can outsource or telework it's staff.
Property holders would feel the tax burden, decreasing the net revenue from rent, and decreasing property values.
Rents are already at "market rates", and property values adjust to reflect the return on renting property. There might be some short-term price fluctuations as property owners try to maintain their existing margins, but an efficient market for real estate will stabilize rents close to the existing prices. The real losers would be those who purchased real estate assets expecting a consistent future return.
Rents are at market rates given current market conditions. Increasing costs to hold property by imposing new taxes on property holders decreases supply of rental property -- that is, it reduces the quantity supplied at any given price point -- which, with a normally-shaped demand curve, decreases the quantity traded and increases the market clearing price.
Market prices aren't independent of market conditions.
That might not be a bad thing.
Not all "property" is real estate, either.
There is simply no way to make it revenue-neutral unless the tariffs are so high that foreign trade is almost entirely eliminated.
Property tax is despicable. In effect, you rent your own property from the government. Can't pay the taxes? Then they take it from you. It happens to people on fixed incomes often enough.
How would we pay to run that bureaucracy? More taxes.
So, even if public education didn't benefit society as a whole, there is still a pretty good reason everyone should pay for it.
It seems odd to object to one but not the other on this basis.
Or you can outsource most of that to the government to do things like maintain the ground book, have a police force etc. You don't have to dispute a lot line with your neighbour because you have common resource that records that. Someone can't come and claim you didn't pay for it (or come in and claim they did) because those records are maintained.
They also manage the stuff that's harder, not simply more expensive, to maintain such as that paint factory upstream that wants to dump their waste into the water.
Sure, in theory you could try to do that all on your own but then you'd have no time to read hn.
"How will you pay for the roads?" has been posed to libertarians as a rhetorical question so frequently that it is now a warning flag that means your discussion counterpart has never bothered researching the opposing position even one iota before judging against it.
Generally speaking, the problem with this variety of debate is that the unstated premises of the opposing positions are completely irreconcilable.
A large fraction of all libertarians believe that taxation is not necessary to provide vital services usually provided by governments, and that any service that cannot be supported by any means other than taxation is, by definition, not necessary to provide at all.
Beyond that large problem with your post, I should also mention some anecdotes. My electricity, water, and garbage removal are provided by private businesses. I have no natural gas service. My local public schools are cash strapped, because one of the two counties that the school district spans won't transfer an appropriate portion of their property taxes to the school district. The local police engage in enforcement-for-profit. The town I lived in previously had a volunteer fire department with facilities and equipment paid for largely by private donations and fundraisers. One of the roads I drive on daily has been a construction zone for more than two continuous years, just so that the city can install a sidewalk to nowhere.
Besides that, property does not attend public school. Children attend school, and the number of children per hectare is not a fixed ratio. The unmetered, non-utility services that governments actually do provide are largely dependent on absolute population size and population density, not on acreage. I would think that a capitation would be more appropriate, but capitations are usually considered regressive taxes, and disproportionately burdensome to the poor. You don't provide services to property, but to the people that live on it. Why not just tax the people directly?
I'm familiar with the libertarian arguments. There is no need for me to mention them every time I make an argument of my own. Omission does not imply ignorance -- I know the libertarian arguments, but I just don't take them seriously enough to mention them every time I talk about taxes.
seibelj: Corporate taxes are regressive.
Roboprog: Stop taxing income. Tax property and imports.
RUG3Y: Flat tax, because property tax is evil.
twblalock: Property deserves to be taxed, because gov't services.
logfromblammo: Gov't services are not sufficient justification for any tax.
See also: every libertarian ever.
twblalock: I have already rejected libertarian arguments.
I, like RUG3Y, think that levying taxes based on the value of owned property is worse than other methods of taxation, particularly when failure to pay the tax may lead to seizure of the property.
The fact is that property does not enjoy the benefit of government-provided services. People do. So you tax the people, in proportion to the cost of providing them with those services, not in proportion to how much their house is worth, as it is a poor proxy for the former. Just as the Window Tax led people to wall themselves off from natural sunlight, property tax discourages people from purchasing and improving property for the long term.
Also, property tax just feels like a protection racket shakedown to me. "Nice lawn. It'd be a shame if someone took it from you and sold it just because you didn't pay me to not do exactly that." It's one of the reasons why I can't stand Georgists/geoists: property taxation is one of their foundation stones.
Edit (rate-limited): If the cost of a road does not scale to the number of users, please explain why a single-lane gravel road costs the same as a 6-lane elevated highway. Sparsely populated areas get reduced services. One guy living in the middle of a 16 sq.mi. ranch does not get city water and a sewer connection. He digs his own well and uses a septic field. He doesn't get fiber to the home; he uses a satellite dish. On the other side, city dwellers get city services because they live at high density, and it is therefore cost effective to do so.
The cost of building a road to a given property, building infrastructure for electrical and sewage services, etc., is not dependent on the number of people living in the property, nor on their incomes. It is dependent on the location and size of the property itself.
The simple truth is libertarian ideas have been tried in the real world several times and don't work.
It is also true that statist ideas have been tried in the real world countless times, and also don't work.
There are no good answers. There are only good enough for now answers.
Property tax is good enough for now. It will not be abolished until something better comes along to displace it.
If you need ideas on how to tax folks without property taxes:
1. Income taxes without so many deductions, and a simple tax code. It is perfectly acceptable to give allowances for dependents, for example, or having a smaller rate for folks that earn less. Similar could be done for businesses.
2. Automatic sales tax, preferably included in the shelf price. Including it in the price makes it easy for folks to forget and easier to increase: Exemptions are OK at times (groceries, for example). This could be extended to include many business supplies.
3. A different sort of luxury tax for non-necessary services and items - such as fast food and convenience services, jewelry, and other such things. In addition, you could extend this tax to make tiers for some sorts of things: vehicles, for example: More sales tax upfront for vehicles that are over the median price, that are less fuel efficient, newer than x years, or other such things.
4. Higher fuel tax and vehicle fees coupled with improved public transportation, increased taxes on vehicles that are harder on roads (heavier vehicles, etc). Realistically, folks in cities with mass transport could pay a higher price because it is less of a necessity.
In addition, some things could change to make the services more cost-effective. Police, for example: Indiana has 3 levels of police: State, county, and city. You could combine these and make better use of resources and have less waste. Same can be said with schools, especially funding schools. As it is, poorer areas have less money for schools when it could be pooled statewide and distributed fairly instead. Property-tax funded schools don't save us from this underfunding, and neither will other district-based taxation.
The difference in these sorts of taxes is that they depend on your income and consumption. They are a bit unfair to poorer folks, but if the welfare system is fair, it can account for these sorts of things (by giving money to cover taxes instead of expecting businesses to take away the tax). I know this list isn't perfect or all that well thought out, but gives examples around the stuff.
I'm very much in favor of redistributing school funding, but that's not a tax decision -- it's a spending decision. If something like that ever happens, the money is likely to come from property taxes, as it currently does -- it will just be distributed in a different way.
In my mind, part of the way to at least lessen the dependence on property taxes (or lower the taxes in general) would be to also redistribute the money on a larger scale. Otherwise, if you get rid of property taxes or lower them to a point, a few areas will likely become underfunded (or more so), assuming that property taxes are generally lower in places with lower incomes.
I do figure you are correct, that at least a portion of it will always come from property taxes.
Regardless, the property tax could be moved to an income or sales tax instead, so if your income drops and you can't pay your taxes you don't risk losing your home.
https://en.wikipedia.org/wiki/Jubilee_(biblical)
Of course, this doesn't actually happen. (Rabbis don't like being lynched, I'm sure)