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PROPERTY TAXES UNDER FIRE: NORTH DAKOTA’S RADICAL PLAN TO END THEM
 
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Thom Hartmann
October 22, 2024
The Hartmann Report
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_ Is this the beginning of the end for property taxes? One state
could change the game… _

,

 

North Dakota may shake this country up in two weeks by ending one of
the oldest taxes in America. Here’s the backstory and what it may
mean to all of us.

When I was 14 years old I bought a single-house-lot of raw land
outside of White Cloud, Michigan for, as I recall, $25. The area had
been a small town in the 19th century but had vanished, turned into a
scrub field surrounded by forest, by the early 20th century; locals
told me they weren’t sure if the town had burned to the ground or
was washed away in a flood (the land overlooked a creek).

I was able to buy that lot for such a low price because the county had
put it up for auction after the previous owner failed to pay their
property taxes. I was the only bidder, so I got it at the initial bid
price. For two decades I paid the property tax on it (typically around
$20/year), until a local resident offered me $500 for it, and I sold
it.

THE POINT OF THIS STORY IS THAT, UNLESS YOU’RE A CHURCH OR OTHER
NONPROFIT, IT’S NOT POSSIBLE TO ACTUALLY OWN LAND IN THE UNITED
STATES. EVERY STATE, COUNTY, AND MUNICIPALITY IN THE COUNTRY LAYS
FIRST CLAIM TO ALL OF THE LAND WITHIN ITS JURISDICTION, AND WE MERELY
RENT THE LAND UNDER OUR HOMES; THAT RENT IS CALLED PROPERTY TAX.

And when you fail to pay your property tax “rent,” as that
previous White Cloud resident had, the government will simply
repossess “your” property and “rent it out” (sell it) to
somebody else.

CHURCHES AND MANY OTHER TYPES OF NONPROFITS (HOSPITALS, NURSING HOMES,
ETC.) CAN OWN LAND BECAUSE THEY’RE EXEMPT FROM TAXATION, INCLUDING
PROPERTY TAXES. BUT THE REST OF US ARE, IN THE FINAL ANALYSIS, MERELY
RENTERS.

This is particularly problematic for homeowners who lose their jobs,
retire, or are forced to take pay cuts; suddenly that property tax
“rent” can throw them into financial crisis or even cause them to
lose their homes.

WHICH IS WHY SOME OF THE GOOD CITIZENS OF NORTH DAKOTA ARE TRYING TO
FIX THIS SITUATION BY OUTLAWING ALL PROPERTY TAXES IN THAT STATE VIA
STATEWIDE BALLOT (MEASURE 4
[[link removed]]).
IF THEY PULL IT OFF (A SIMILAR EFFORT IN 2012 WAS DEFEATED), THEY’LL
BE JOINING A COUPLE OF DOZEN OTHER COUNTRIES THAT ALLOW CITIZENS TO
FULLY OWN LAND WITHOUT HAVING TO PAY PROPERTY TAX “RENT.”

They include
[[link removed]]: Cayman
Islands, Fiji, Malta, Cook Islands, Monaco, United Arab Emirates,
Dominica, Georgia, Bahrain, Kuwait, Liechtenstein, Oman, Grenada,
Vanuatu, Saudi Arabia, Turks and Caicos, Sri Lanka, Faroe Islands,
Qatar, Brunei, Croatia, Mauritania, and Seychelles.

JOHN LOCKE, IN THE 17TH CENTURY, WAS THE FIRST TO PROPOSE THAT PEOPLE
SHOULD HAVE A “NATURAL RIGHT” TO OWN LAND (ALTHOUGH THE GREEKS AND
ROMANS HAD RECOGNIZED THIS RIGHT FOR THE ELITE).

In his _Second Treatise of Government
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written when most Europeans were landless serfs, he proposed that as
long as there was “enough and as good left in common for others,”
individuals should be able to own land and pass it along to their
heirs. His writings became the foundation for modern property rights.

Property taxes also go back to the 17th century; the first in Europe
was imposed in England when, in 1601 (also the year the British East
India Company was formed [[link removed]]), Parliament passed
the “Statute 43 of Elizabeth.” In the United States, property
taxes were imposed by most state and many local governments within two
years of the ratification of the Constitution in June of 1788.

PROPERTY TAXES ARE GENERALLY USED TO FUND LOCAL SERVICES, BEING THE
TAX THAT’S “CLOSEST TO THE GROUND” (NO PUN INTENDED), INCLUDING
POLICE, FIRE, ROADS, AND SCHOOLS. IN MANY WAYS THIS HAS BECOME
PROBLEMATIC: THOSE COMMUNITIES WITH THE MOST DYSFUNCTIONAL POLICE
DEPARTMENTS AND POORLY PERFORMING SCHOOLS, FOR EXAMPLE, ARE TYPICALLY
THOSE WITH THE LOWEST PROPERTY VALUES AND THUS LITTLE REVENUE FROM
PROPERTY TAXES.

On the other hand, the very local nature of property taxes tends to
keep homeowners more closely in touch with activities performed by
their local governments.

In 1977, Ireland ended property taxes for individual residences (they
called them “rates”), although commercial properties were still
taxed. The experiment wasn’t successful, though: within a generation
property taxes were re-introduced
[[link removed]], first with a
“Non-Principal Private Residence Charge” in 2009, followed by a
“Household Charge” in 2012, and finally a full return to a
“Local Property Tax” in 2013.

LOUISE AND I SPENT A WEEK OR TWO TRAVELING AROUND IRELAND AROUND THE
TIME THEY WERE REPEALING THEIR PROPERTY TAX. WE’D RENTED A CAR AND
STOPPED A FIFTYISH MAN WALKING ALONG A DIRT ROAD IN A TINY RURAL TOWN
TO ASK DIRECTIONS TO A GOOD RESTAURANT/PUB; HE PROMPTLY JUMPED INTO
OUR BACK SEAT AND LED US TO HIS FAVORITE PLACE, WHERE HE AND THE
LOCALS TAUGHT US SONGS IN GAELIC (WE BOUGHT THE DRINKS).

His name was Mike Mansfield and it turned out he was the local
postmaster, playing hooky from his job (and, it turned out, his wife).
We spent the day together and, when the topic of property taxes came
up, he said something I’ve never forgotten:

“Nobody should ever lose their gaff [home] just because they can’t
afford to pay the government its annual whack.”

In many states here in America, we honor a variation on this principle
by allowing people to keep their homes in bankruptcy (although wealthy
people love to abuse the privilege by stashing their wealth in an
expensive mansion, particularly in Florida
[[link removed]]).

PROPERTY TAX REFORM IS A HOT TOPIC IN AMERICA AND HAS BEEN IN A BIG
WAY SINCE 1978, WHEN HOWARD JARVIS FAMOUSLY LED THE CHARGE WITH
PROPOSITION 13 IN CALIFORNIA TO CAP PROPERTY TAXES, SO LONG AS A
HOMEOWNER STAYS IN THEIR RESIDENCE.

Because Prop 13 also froze property taxes for commercial property,
it’s led to some significant warping of the California business
property market, but the state has not, so far, seen a serious move to
repeal it.

THE STRONGEST ARGUMENTS AGAINST PROPERTY TAXES ARE THE MORAL ONE
(PEOPLE SHOULD BE ABLE TO OWN, NOT JUST RENT, THE LAND THEY OCCUPY SO
THEIR ABILITY TO LIVE IN THEIR HOMES ISN’T DEPENDENT ON CONTINUED
EMPLOYMENT), AND THE CONCERN THAT SCHOOLS REFLECT THE WEALTH OF THEIR
LOCAL COMMUNITIES, LOCKING POOR COMMUNITIES INTO CYCLES OF POVERTY
RESULTING IN PART FROM IMPECUNIOUS FUNDING LEADING TO UNDERPERFORMING
EDUCATIONAL SYSTEMS.

Another progressive argument against property taxes is that when local
services are funded by state government they’ll tend to become more
uniform across the state and will be paid for by income taxes, meaning
those who can most afford to pay those income taxes will pick up the
bill.

THE STRONGEST ARGUMENTS FOR KEEPING PROPERTY TAXES ARE THAT THEY’RE
MORE DIRECTLY UNDER THE CONTROL OF LOCAL CITIZENS (BY VOTING IN OR OUT
LOCAL OFFICIALS WHO SET THE TAXES OR SOMETIMES DIRECTLY VOTING ON THE
TAXES THEMSELVES) AND THEY REDUCE THE BURDEN ON THE STATE GOVERNMENT.

North Dakota, for example, says they’ll need to raise around $3.15
billion in additional revenue during the first two years after a
property tax prohibition is put into place. The wealthy people who
largely control the political machines of the state are not looking
forward to that in the least.

Data-licensing firm ATTOM reports in its 2023 property tax analysis
[[link removed]] covering
89.4 million American single-family homes that American homeowners and
businesses paid $363.3 billion in property taxes last year, a 6.9%
increase over $339.8 billion in 2022.

According to a 2023 University of Chicago Harris/AP-NORC Poll
[[link removed]],
fully 69 percent of Americans consider their property taxes to be too
high; a majority claim that “middle income earners” are hit with
the heaviest tax burden, as they don’t have access to the
sophisticated ways the morbidly rich and churches (and pastors who
claim their homes are rectories) can evade this form of taxation.

I’VE ARGUED FOR YEARS THAT WE SHOULD DISCONNECT PROPERTY TAXES FROM
SCHOOLS AND POLICE DEPARTMENTS BECAUSE, AS MENTIONED, POORER
COMMUNITIES TEND TO END UP WITH UNDERFUNDED, DYSFUNCTIONAL VERSIONS OF
BOTH.

There’s also an argument to be made for a
residential-property-tax-only version of California’s Prop 13 so, as
neighborhoods increase in value, people aren’t forced out. Property
taxes would only be reevaluated (possibly beyond small annual
increases) when the property is sold, keeping neighborhoods intact.

THAT SAID, ENDING PROPERTY TAX ALTOGETHER IS PROBABLY A BRIDGE TOO
FAR, AS IRELAND DISCOVERED. BUT NORTH DAKOTA MAY SURPRISE US ALL.

Keep an eye on Measure 4 in North Dakota this November 5th; if it
passes, it’s a certainty there will be a knock-on effect as similar
ballot measures will begin to proliferate across the states that allow
them.

This issue isn’t going away any day soon. And it deserves a serious
reevaluation across most states.

_Thom Hartmann is a NY Times bestselling author of 34 books in 17
languages & nation's #1 progressive radio host. Psychotherapist,
international relief worker. Politics, history, spirituality,
psychology, science, anthropology, pre-history, culture, and the
natural world._

* Property taxes
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* abolition
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* North Dakota
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* ballot referendums
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