However, the abolition of Florida’s property tax is a hugely ambitious goal. According to the Florida Policy Institute, if the property tax were abolished, the state government would have to replace more than $2,000 of lost revenue for every person, including children, in the state.
DeSantis asserts that much of the revenue could be replaced by raising taxes on “tourists” and “foreigners” through higher taxes on hotel rooms, restaurants, fuel, higher sales tax on certain items, and so forth. Can the governor find a way to make the numbers add up? I have no idea; that is a technical problem for DeSantis and the Florida Legislature to solve. But I heartily encourage the governor and lawmakers to find a way to abolish taxes on people’s residences.
In Florida, as in the other states, various units of government spend a lot of money, and they have to raise that revenue somehow. With heavy government spending firmly entrenched in American society, reducing the overall tax burden is problematic. That being said, some forms of taxation make more sense than others. The fairest and least painful (note: “least painful” does not mean pain-free) form of taxation is consumption taxes such as sales and excise taxes.
Less fair and more painful are income taxes. (Just for the record, I am not a fan of income taxes, but with government being as huge as it is today, a continuation of income taxes seems likely for the foreseeable future in spite of enticing proposals such as the “fair tax,” which would replace the income tax with consumption taxes.) Since Florida is one of the states without a state income tax, replacing property taxes with income taxes there is a political nonstarter. The worst taxes—the least economically rational—are those levied on people’s homes.
The fundamental problem with property taxes is that they are an anachronism. Taxing real property made sense in 19th-century U.S. agrarian society. In the 1800s, the property tax served as a proxy for one’s income. This made a lot of sense then. It was logical to assume then that Farmer Jones was going to generate more income from his 160 acres of farmland than Farmer Smith from his 40 acres.
Today, however, it is a different world and a different economy. The homesteads of most Americans are not their source of income but merely where they live. Why, then, take more money from a citizen with a house of 2,500 square feet than one with 1,500? The one living in the smaller house (Warren Buffett?) may have a much larger income than the one with the larger house. We should remember Adam Smith’s “ability to pay” principle. In the present, one’s ability to pay generally depends on one’s income rather than on the size of one’s house (unless one is using a house as a source of income, such as by using it as an Airbnb). It is only inertia and force of habit that keep governments taxing people as if their houses were the sources of their incomes.
A major fault of the property tax is that it can cause people to lose ownership of their homes. You would think that once a person has paid off the mortgage on his house, he would own it free and clear, but this is not so. A homeowner may have faithfully made his monthly mortgage payments for 30 years and paid it off completely but may, in one’s senior years or perhaps as a result of unexpected job loss, fall on hard times and no longer be able to afford the annual tax on the house. Then the sheriff comes and the “owner” becomes a non-owner and is evicted. So-called property rights are summarily nullified.
Under the present system, a person doesn’t really “own” his home completely but in effect rents it from the local government, which permits him to keep it only so long as the “owner” continues to pay the taxes assessed on the house. Sad are the stories of senior citizens—decent, law-abiding citizens who worked hard for decades to buy their own homes—having to sell their homes because they couldn’t afford the taxes.
Owning one’s own home has long been a major part of “the American dream.” It is anomalous and, I would say, un-American for local governments to make it difficult for some citizens to keep their homes. The property tax is outmoded, unfair, economically irrational, and destructive. It is time to abolish it. Good luck to DeSantis and the homeowners of Florida in ridding themselves of this antiquated, outdated form of taxation.
