Counterpoint: Payments for locally provided goods and services should not end once a home is paid off
The Owatonna People’s Press has an op-ed from Derek Delaney titled “Property taxes in Minnesota should end once a home is paid off.” I have long argued that Minnesotans are overtaxed and ought to be taxed a good deal less than they are. However, I believe that Mr. Delaney is wrong and that a policy such as he suggests would be both fiscally irresponsible and unfair.
Property taxes pay for local goods and services
Delaney writes that:
For many Owatonna residents, owning a home represents the pinnacle of the American Dream — a reward for years of hard work, savings, and responsibility. Yet even after a homeowner pays off the mortgage and clears all debts, an ever-looming obligation remains: property taxes. These annual payments, which continue indefinitely, often feel like a penalty for success and a burden that never truly lifts.
He is right, I think, in saying that property taxes “often feel like a penalty for success,” but that does not mean that they actually are.
Local governments provide certain goods and services, like schools, police, parks, the fire department etc., and these goods and services need to be paid for. The property tax is a payment to the local government for those goods and services provided by it. The burden should not lift as long as you are consuming those goods and services; whether you have paid off your mortgage or not is totally irrelevant.
Inter-generational fairness
Delaney argues that: “For many older homeowners, particularly those on fixed incomes, this is not just unjust — it’s dangerous.” He goes on to note that:
Like much of the nation, Minnesota is aging. The Minnesota State Demographic Center projects that by 2030, more than one in five Minnesotans will be over age 65.
I agree, but the obvious conclusion is the opposite of the one he draws. If we are going to exempt older Minnesotans from paying for the locally provided goods and services they consume, the shrinking share of younger Minnesotans will have to pay for them. What do we think this would do to family formation and childbearing? Nobody has ever explained to me why this is fair.
Delaney concludes by saying:
At the heart of this proposal is a question of fairness. If someone has worked their entire life to pay for a home — already contributing thousands in property taxes along the way — shouldn’t they eventually be able to live in that home without further payments to the government?
But what is fair about people who consume locally provided goods and services having them paid for by other people?
Raising other taxes to eliminate the property tax
Mr. Delaney notes that such concerns are both “valid” and “solvable.” Sadly, he doesn’t explain how they are “solvable.”
His first point is simply to wave these “valid” concerns away by saying that “tax policy is not just about revenue generation but also reflects values and priorities.” This is the sort of hand-waving one usually hears from the state’s “progressives”. Values and priorities don’t pay for squad cars or fire trucks. His proposed “graduated phase-out” merely postpones the “valid” concerns: it doesn’t solve them.
His second point is that “governments can rebalance by diversifying revenue streams.” So, they will cut property taxes for seniors — a growing share of the population — and make up the lost revenue with a variety of gimmicks like higher local sales taxes. A boon for businesses in neighboring towns.
Delaney argues that:
One of the most unsettling aspects of property taxes is their permanence. Even after a homeowner has fulfilled all financial obligations to own their home outright, the government still requires them to pay annually — or risk losing their property. This undermines the very concept of ownership. In Minnesota, failure to pay property taxes can lead to a forfeiture process, meaning the government can take away your home over unpaid taxes, regardless of whether you’ve lived there for 40 years or just finished paying it off.
But, presumably, if you replaced a property tax with a higher local sales tax there would be some legal penalty for not paying that. Nobody has ever explained to me why someone losing their house for non-payment of taxes is in a different category of moral turpitude to someone losing their liberty for non-payment of taxes. Property taxes are no more morally repugnant than any other tax.
Reform rather than abolition
In its current form, the property tax is needlessly opaque, and this explains a good chunk of its unpopularity. Maybe it needs to be rebranded as a “community charge” to break the psychological link between the payment and living in one’s house. Certainly, any link between increases in assessed property values and increases in property tax payments needs to be broken; after all, it is the cost of providing the goods and services that matters. And, just as certainly, local government spending needs to be held in check.
But these are arguments for reforming the property tax, not abolishing it or exempting a class of people from it so that they can “free ride” at the expense of others.
Final questions for property tax abolitionists
To those who want to see property taxes eliminated, I say one of two things:
- If you are willing to forgo the goods and services property taxes pay for in exchange for eliminating the property tax, then I have no issue with that: you have accepted the tradeoff.
- If you are not willing to forgo the goods and services property taxes pay for but want the property tax eliminated anyway, then the question is “How are you going to pay for them?”
It is striking how many people — even those who claim to be “conservative” — believe there is such a thing as a free lunch when they think they are going to get it.