"If the major opportunities for future growth of government lie in the area of conventional taxation, are there any defenses available to the citizenry? ... Perhaps the most fruitful advice comes in two parts. The first piece of advice is to avoid war and the rumor of war: this is history's greatest boon to the tax man. ... The second piece of advice is to seek ways of inhibiting government's ability conveniently to increase its collections. Possibly the very increase in that ability that is in prospect can be turned to account by a constitutional provision which forbade the income tax, and perhaps even the storage of information regarding individual incomes by third parties, including government." ~ Benjamin Ward
The State as Landlord
Six years ago, I bought a house. I took out a mortgage to pay for it and received a property deed with my name on it. I was told that I was the owner. I thought my renting days were over. I was wrong.
The other day I received my annual property tax bill in the mail. If I don’t pay the annual rent to the landlord and true owner—the State—it will evict me and sell my house to another tenant. Oh sure, it leads me to believe that I own the house, but it just lets me stay here as long as I pay the rent.
A property tax is among the worst types of taxes. Here’s why:
- It is very difficult to avoid a property tax, whereas avoiding other taxes, such as the estate tax or the income tax, is relatively easy. You can’t move or hide real estate, so once it’s on the county’s books, it’s there forever.
- County commissioners can raise property taxes without having to pay a political price by getting the property appraiser to increase the appraised value of property. Politicians who want to raise taxes greatly prefer that method over the more straightforward method of increasing the millage rate.
- The appraised value of a property is not equal to its true fair market value, since that is determined only when a property is sold. Therefore, the appraised value is whatever the property appraiser says it is. Oh sure, you can appeal the appraised value just like I did a couple of years ago after I discovered that my neighbor was paying less property tax than I was even though his house was significantly larger. I confirmed that the county was overcharging me by obtaining the records of recent sales in my neighborhood from my real estate agent. In almost every case, houses that were significantly larger than mine had both a sales price and an appraised value that were below my house’s appraised value. About nine months after I sent in my appeal (which required that my signature be notarized—just another obstacle they put in your way to prevent you from appealing the appraised value), the county sent me more paperwork that had to be notarized. About five months after I sent that in, I was given a date and time to appear before the Tax Equalization Board to argue my case. If I couldn’t make it then, too bad. When I sat down with the Board, a bureaucrat was there from the Property Appraiser’s office to argue their case. I remember thinking that there’s a special place in Hell for people like her. She opened my file and pulled out a picture of a house, which looked like a house that might be found in my neighborhood. But it wasn’t my house, and it was significantly larger than my house. Then I realized that she thought that it was a picture of my house! Boy, did she have egg on her face. That made her look totally incompetent, and made the Board more sympathetic to my arguments. Nevertheless, they reduced the appraised value of my property by only about $3,000, and didn’t refund any of my overpayments from previous years (possession is 9/10 of the law, especially if it’s in the possession of the State).
(By the way, if you’re retired or just have some free time and want to wreak havoc on the State, get on a county Tax Equalization Board and side with taxpayers as much as possible. In my county, the board has three members, all of whom are private citizens.)
- Property taxes are not applied equally. In many counties and cities, the wealthiest segment of the population is partially or totally exempt from property taxes. You see, they’re on a “fixed income” (COLA-adjusted Social Security payments and payments from a pension and/or an IRA or employee retirement plan) and don’t have any school-age children, so the politicians say they shouldn’t have to pay property taxes. But that rationale is faulty, because I don’t have any school-age children, either, but I still have to pay. And even if I did have school-age children, I would never send them to a government school. The real reason senior citizens are often exempt from property taxes is because they vote, and politicians buy their votes with my tax dollars. People who own smaller, less valuable properties also avoid paying “their fair share” because of homestead exemptions that exempt the first $X of the appraised value from tax. Note that this group includes some people who are very wealthy.
- In my county, two-thirds of property taxes go to fund the reproductive organs of the State—government schools. It is particularly offensive to me that the money that is stolen from me gets used in this manner.
- For most homeowners, their mortgage company pays their property taxes, so the only time that homeowners are reminded of how much their property taxes are is when they receive their annual bill from the county and when the property tax expense appears on their escrow statement. I don’t know about you, but reviewing my escrow statement is not the highlight of my quarter.
Every time I’m reminded of how much I’m paying in property taxes, I want to kill my landlord.