another reason Marx was wrong

Max Sawicky sawicky at epinet.org
Tue Nov 21 14:24:10 PST 2000


The conventional leftie wisdom is that prop taxes are regressive because landlords pass these taxes along to renters. I am skeptical. I think property ownership reflects income, so property taxes track income. They are closer to proportional, neither regressive nor progressive.

Local prop taxes introduce a whole new dimension. Imagine two jurisdictions with equal pop, one with five times the income of the other, and suppose peoples' residences value tracks their income, so the average house in one place is five times the value of the average in the other. A percentage tax in one place gets you five times the revenue of a percentage tax in the other. So if the two jurisdictions have the same tax rate, one can spend five times as much as the other. Hence if the richer jurisdiction spends less than five times as much, it's getting more expenditure at a lower tax rate, and this expenditure is a lower share of its income.

Whether this effect is big enough to outweigh the implications of the sales tax is an empirical question. My suspicion is that local finance is more regressive, even if the prop tax falls on owners rather than renters.

Some Repugs have moved away from the local prop tax, I hypothesize, as a sop to well-to-do elderly and childless persons who are hostile to local finance of public ed.

mbs

_________

CB: Michigan shifted to greater emphasis on sales taxes from property taxes for education a few years ago, but we lefties opposed it because we thought sales taxes were more regressive, since sales taxes are on regular consumer goods and might be a larger fraction of working class or poor incomes. (That might not be precisely regressive). , Plus I don't know that there was an analysis based on real data.

I think I get your point that richer areas have more money for their schools when the tax is on property.

(((((((((((((

CB: I was going to ask about that claim too. What, capitalist corps pay the most property taxes , or something ?



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