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In Defense of Property Taxes (I Know, I Know)

In the 1970s, big increases in house prices in many parts of the US brought big increases in property tax bills, followed by a tax revolt — represented most famously by California’s Proposition 13 in 1978 — with consequences that have reverberated ever since. 

Even-steeper house-price increases during the Covid-19 pandemic brought a less dramatic rise in property tax revenue nationwide, thanks in part to measures adopted during and after that 1970s tax revolt. 

But the tax increases were big enough in some places that another revolt has been brewing.

Activists and politicians in several states have also been promoting the more drastic solution of abolishing some or all property taxes, and although voters rejected one such attempt in North Dakota last year, 2026 is likely to see more of them.

The economic case for taxing property, in particular the part of property value constituted by land, is that unlike most other taxes, it doesn’t discourage any productive activity. 

“The annual produce of the land and labour of the society, the real wealth and revenue of the great body of the people, might be the same after such a tax as before,” Adam Smith argued in The Wealth of Nations in 1776, 

and in recent years economists have consistently found that shifting to property taxes from income or consumption taxes increases gross domestic product growth.

The best remedy, argues Jared Walczak, vice president of state projects at the center-right Tax Foundation and author of a couple of illuminating reports about the current property tax revolt, is a so-called levy limit that restricts how fast tax bills can rise.

Giving special circuit-breaker or homestead-exemption treatment to the elderly, as is common, means favored tax treatment for a group that has experienced huge wealth gains in recent decades.

Most problematic are laws that freeze or limit increases to a home’s assessed value as long as it doesn’t change hands. California’s Proposition 13 included such a freeze (along with a levy limit and other provisions). 

Florida’s 1992 Save Our Homes amendment put a 3% limit on annual valuation increases. When property values rise a lot, as they have in California and Florida, this creates huge disparities in property tax bills between longtime homeowners and recent purchasers, and with them ever-growing incentives for the long-timers to stay put. 

Keeping misguided anti-tax activists from destroying what’s good about property taxes is something of a political imperative for local governments in the US right now.

Justin Fox Bloomberg November 11, 2025  

Justin Fox is a Bloomberg Opinion columnist covering business, economics and other topics involving charts. A former editorial director of the Harvard Business Review, he is author of “The Myth of the Rational Market.”

https://englundmacro.blogspot.com/2024/08/justin-fox-myth-of-rational-market.html

https://www.bloomberg.com/opinion/articles/2025-11-11/in-defense-of-property-taxes-i-know-i-know 

Ebba Busch vill göra sänkt eller slopad skatt på bostadsvinster till en valfråga 2026

https://englundmacro.blogspot.com/2025/11/ebba-busch-vill-gora-sankt-eller-slopad.html