¶ … property taxes are regressive or progressive has been a hotly debated issue for most of the nation's history (Taxes on Wealth, Property, and Estates).
The traditional understanding regarding the levying of property tax was that such tax was a practical attempt at balancing the distribution of wealth in America. Those owning property were considered to be wealthier than those who do not and, therefore, taxing property owners in an effort to fund government function was believed to relieve the poor and pass the burden onto those who were in a better position to afford it (p. 677).
Property taxes are a form of a broader classification of taxes identified as wealth taxes (p. 675). These forms of taxes are applied against certain aspects of wealth with the most common form being property taxes which are based on the ownership of real estate. Real estate is open and apparent and impossible to hide or disguise so believed to be the best source for taxation (p. 676).
Some argue, however, that the assessment of property taxes in the United States has become regressive. That is, low-income homeowners pay proportionately more of their income on property tax than their high-income counterparts. This situation has developed as homeowner incomes have slowed while property values have raised rapidly. Not all experts agree on whether property taxes are regressive or progressive. Those who argue that property taxes are progressive point to the fact that property taxes tend to reduce the return on capital (p. 690). The net effect of this is that investment in poorer areas decrease and so do rents so that property values decrease as well. The lower property values serve to decrease the property assessments and, therefore, the corresponding property tax, however, there is a delay in the timeframe.
Whether or not property taxes are regressive or progressive will continue to be debated. Regardless, such taxes have become a mainstay and are not likely to be abandoned.
References
Taxes on Wealth, Property, and Estates.
Property & Income Tax
