Tax Equity and Fairness: Property, Sales, and Excise Taxes
This paper examines the concept of tax equity and fairness across major categories of taxation in the United States, including property taxes (ad valorem), sales taxes, excise taxes, and user fees. It discusses how local and state governments levy these taxes, how rates fluctuate based on jurisdiction and economic conditions, and the debate over regressivity in sales taxation. The paper also explores the foundational principles of an equitable tax system — economic efficiency, simplicity, neutrality, and transparency — and analyzes horizontal and vertical equity as frameworks for evaluating fairness in public revenue collection.
- Introduction to Property Taxes: Ad valorem taxes on real estate and personal property
- Sales Taxes, Excise Taxes, and User Fees: How governments tax consumption and specific goods
- Principles of Tax Equity and Fairness: Efficiency, neutrality, and equity in tax systems
- Horizontal and Vertical Equity in Public Revenue: Dual equity dimensions guiding government revenue policy
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What makes this paper effective
- Grounds abstract tax concepts in concrete, relatable examples — such as homeowners paying mortgage-linked property taxes and the effect of millage rate votes on school funding — making the content accessible.
- Presents multiple perspectives on contested issues, notably acknowledging the regressive nature of sales taxes before offering the counter-view that they are voluntary and broad-based.
- Applies two well-established analytical frameworks — horizontal and vertical equity — to evaluate real-world tax policy, demonstrating conceptual fluency in public finance.
Key academic technique demonstrated
The paper uses definitional framing followed by applied example — each tax type is defined, illustrated with a real-world scenario, and then evaluated against equity criteria. This deductive structure is a reliable technique in public administration writing that keeps the argument organized and easy to follow.
Structure breakdown
The paper opens with property taxes and their local-government context, then moves to sales, excise, and user fees, before shifting to normative evaluation. The final section ties the discussion together by applying horizontal and vertical equity as dual lenses for assessing government revenue systems. Two core sources — Mikesell's Fiscal Administration and a Laureate Education video — ground the analysis throughout.
Introduction to Property Taxes
Taxes on property — also known as ad valorem taxes — are imposed on the real value of real estate or other assets that an individual owns. Local governments impose these property taxes on a recurring basis (Mikesell, 2014). For example, a homeowner either pays their taxes on a yearly basis or remits a monthly fee as part of their mortgage payments. These taxes are subject to fluctuation based on a jurisdiction's assessment of the property's worth, taking into account factors such as market value, condition, location, and changes to the amount apportioned among various tax recipients.
For instance, when residents of a given community vote to increase the millage rate for their school system, this directly affects the tax rate on local homeowners — the tax levied on their properties increases accordingly. The reverse also applies: when property values fall due to adverse economic circumstances, home taxes decrease. Beyond real estate, other items subject to property tax include boats, automobiles, airplanes, and recreational vehicles. In some states, additional property taxes are imposed on certain business types, such as wharves and factories.
Sales Taxes, Excise Taxes, and User Fees
A tax on purchased goods and services is commonly referred to as a sales tax, and it is one of the primary ways local governments and states raise revenues. At the retail level, purchases are assessed a varying tax rate applied as a percentage of the sales price of a given item. These rates vary between jurisdictions, and the nature of the item also matters — a pair of shoes may be taxed at one rate, restaurant food at another, and staple commodities purchased at a grocery store may carry no tax at all.
Sales taxes are regarded by some as among the most equitable forms of taxation because they are made voluntarily and draw revenue from a broad consumer base. In contrast, others view them as regressive, since poorer individuals pay a larger proportion of their incomes in sales taxes than wealthier members of the community.
Excise taxes are calculated based on the quantity of items purchased rather than their price. For example, the federal government imposes an excise duty on every gallon of gasoline purchased, regardless of the price charged by the seller. Items such as alcohol and cigarettes carry a specific type of excise tax commonly called a "sin tax." User fees, by contrast, are charges imposed for access to specific services, including toll roads, hotel rooms, airline tickets, utilities, and rental cars, among others (Mikesell, 2014).
References
Laureate Education (Producer). (2008). Budget management functions: Revenue [Video file].
Mikesell, J. L. (2014). Fiscal administration: Analysis and applications for the public sector (9th ed.). Wadsworth.
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