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How about taxing them? Is that allowed by the constitution?

The federal government can’t put in a property tax on these rights because of the direct tax clause. The state governments could tax the water rights, but not in a way that is “confiscatory” or “excessive.”

> The state governments could tax the water rights, but not in a way that is “confiscatory” or “excessive.”

What does confiscatory and excessive mean in this case? People do have to sell off properties to pay off tax debt (some properties are exempt I guess) so I would hope water rights could be taxable even if the result is that the owners would be forced to sell the rights. Am I incorrect?

what is the value on which the tax is levied? I think if you follow this train of thought to its logical conclusion, the tax would be levied on a value that is "arbituary", since these water rights are granted, and not purchased at a market price.

I think the gov't paying to buy out all existing rights, is better than allowing arbituary taxation like this.

We assess the value of real estate for taxation purposes. We can assess the value of water for taxation purposes.

Yeah seems to me like taxing the water on its true value and thus forcing efficient usage of it would be the rational market oriented approach.

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