In recent weeks, the anti-property tax movement has been blossoming in the blogosphere, with increasing numbers of people demanding that their local property taxes be eliminated. However, there is a better way, and Texas Governor Greg Abbott has it.

The Spectator sees it as a Gen Z issue. Five states (Florida, Illinois, Kansas, Ohio, and Pennsylvania) are contemplating eliminating the property tax entirely. This is throwing the baby out with the bathwater.

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But recently, a breath of fresh air blew across the network in the form of Texas Governor Greg Abbott’s plan to reform rather than eliminate the property tax. The Governor proposes to democratize the property tax by submitting any proposed increase in the property tax to a plebiscite.

This is really good news because there are four very solid reasons why the property tax should be retained, not eliminated.

Reason #1

The first of the four reasons is that the “property tax” is not a tax on property. The income tax is a tax on income, and the sales tax is a tax on purchases, but the property tax is not a tax on property. Yes, yes, that sounds outrageous, but please humor me and give me a chance to explain.

Every November, the taxing districts across the fruited plain (cities, counties, school districts, fire districts, sewer districts, water districts, etc., etc.) adopt a budget for the following year. Then, in January of the following year, that budget is levied against the property owners in that taxing district.

The total tax is the total budget. The tax is a direct function of the budget. If the budget were zero, the tax would be zero. And the dollar value of every line in the budget is the projected cost of some service the district intends to provide its taxpayers in the coming year.

The budget is a funding plan for government services. If there were to be no services, then there would be no budget and, consequently, no tax. Therefore, the tax is a tax on government services. Thus, the property tax is a tax on government services, not on property.

Note the difference with the income tax. If the federal government stopped spending, the income tax would continue unabated, as the income tax is not a function of government spending. The same is true of the sales tax.

Now, some people are hung up on the seeming implication in the phrase “property tax,” and are right now screaming, “Then why do they call it a property tax?” Those people should read Reason #2, below.

Reason #2

The second reason the property tax should be retained is that it is a true progressive tax. In this context, the meaning of the word “progressive” is different from its meaning when used as a descriptor of leftist ideology.

In the present context, a progressive tax is one designed to place a heavier tax burden on the wealthier taxpayers. And the property tax does this by the simple expedient of charging each taxpayer with that portion of the budget that represents the portion of the entire value of the taxing district that the taxpayer owns.

To illustrate: If the value of the taxpayer’s property in the district were one percent of the total value of all the property in the district, then the taxpayer’s tax liability would be one percent of the budget. Thus, he owes the portion that he owns. The value of the taxpayer’s property serves as a metric for the computation of the taxpayer’s tax liability. That’s why it is called a “property tax.” It would be more accurately called a “proportional property value computed tax,” but it is less of a mouthful to just say “property tax.”

This is a good point that highlights the wisdom of Governor Abbott’s plebiscite proposal. As noted above, the Governor is reported to be proposing that any property tax increase be submitted to a plebiscite. Is that workable?

Indeed, it is, as there are exactly two ways in which a taxpayer’s property tax liability can be increased: (1) By increasing the taxpayer’s portion of the total district property value, and (2) by increasing the budget.

That second method is the way the government increases property taxes, and it is very susceptible to a plebiscite. Requiring that the district voters approve every budget increase is a brilliant idea that has every potential to rein in the unrelenting growth in property taxation.

Reason #3

The third reason for retaining the property tax is that, by its very nature, the property tax discourages the government from creating a slush fund. This is because the budget itself caps the total property tax that the taxing district can collect. The collected tax can never exceed the budget that is levied against the district taxpayers. It is difficult—not impossible, but difficult—to collect money not earmarked for some line item and specific service, and therefore difficult to create a politician’s slush fund.

Reason #4

The fourth reason for retaining the property tax is that if the property tax were eliminated, the money generated by that tax must be generated by some other tax and—somehow—distributed appropriately to the taxing districts. No one has a clear idea about how to do that. Tossing the property tax would create a huge puzzle with no known solution.

Conclusion? Don’t eliminate the property tax. Reform it, using the Abbott plebiscite!