Reply to New real estate assessment rates are released from State of Maryland

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[quote=Anonymous]NP.  Far from complete and subject to rigorous debate, I'm sure, but...

Tax should be based on one's wealth -- a proxy for the benefit one achieves from a society given the particular rules of that society.  In this sense, real estate tax is more just than income tax, as the one is based in an asset directly representing one's wealth while the other is based only in the [i]change[/i] in one's wealth.

Tax basis should allow for [i]necessary[/i] expenditures, both current and anticipated -- assets only represent wealth when considered against liabilities.  In this sense, real estate tax is less just than income tax, as the homestead exemption (as currently afforded) of the one is less well aligned to the concept than the exemptions/deductions of the other (though these certainly could use adjustment to better capture that which is truly necessary).

Tax should be collected at times of asset liquidity -- it is incredibly inefficient to members of society to burden illiquid assets and destructive of societal wealth to encourage more frequent transaction (as might happen when there are not liquid assets enough to cover tax) due to the associated unproductive costs.  In this sense, real estate tax is less just than income tax, as the one is relatively illiquid and the other is highly liquid, not to mention the rather high burden of disruption to an individual's life imposed by any move forced/encouraged by the tax burden.

Society should finance its expenditures -- the economies of scale and scope in this realm are far greater for the collective than they are for individuals.  In this sense, collection of real estate tax on an annual basis, given the above, and any suggestion of individual financing for such is less efficient (if not less just) than collection of income tax.

We should move towards more wealth-based taxation vs. income-based taxation.  To the extent that real estate represents wealth above that necessary for basic living (perhaps some formula based on household size, owner's equivalent rent, age, medical circumstance and the like), it is reasonable to have that taxed (though no more so, and probably less so, than more liquid assets, like market equities).  To capture economies and minimize disruption, it would be reasonable to have a societal financing mechanism, (e.g., an accrual of tax liability bearing interest at the societal cost of capital and collected at the time of ownership transfer) rather than a yearly collection vs. the illiquid and necessary asset.[/quote]

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