Property taxes shouldn’t interfere in the price mechanism for real estate.

As I’ve written before, when considering a state’s mix of all the different taxes, I’m not as bothered by high property taxes as other folks on the hawk side of the taxation spectrum.  That said, the Rhode Island Public Expenditure Council (RIPEC) makes a good point that differentiations between different types of property should be a separate consideration:

Layered over wide disparities of property wealth between communities are tax policy choices—chiefly classification differences and homestead exemptions—that effectively shift the tax burden away from resident homeowners and toward businesses and renters. Higher nonresident tax burdens and commercial rates applied to apartment buildings make housing less affordable to those most in need of it. They also discourage the development of more affordable, higher-density housing.

RIPEC dresses its commentary up in “equity” language, but the real problem is that differentiated rates hinder the market’s ability to set prices.  A parcel of property is a parcel of property, no matter what use its buildings are put to.  Unless the goal is for politicians to buy votes by taking money unjustly from people who can’t vote against them, higher taxes are a discouragement to commerce, which doesn’t solve anybody’s problems.

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