Last week the State of Wyoming advanced a bill by Rep. Steve Harshman to eliminate most property taxes in Wyoming along with a two percent hike in the State’s sales tax. Shifting the tax burden away from property taxes and onto sales taxes or consumption taxes is an idea which is now gaining a lot of steam all across the country. Besides Nebraska, states which have seen these kinds of bills in recent years include Florida, Idaho, Kansas, Michigan, North Dakota, South Carolina, and Texas. In 2020 Rep. Jason Monks of the Idaho State House of Representatives introduced a similar bill and remarked that the property tax is “an evil tax.” So, today I would like to explain why the property tax is so vile.

The property tax is the most regressive kind of tax. The property tax is a tax on a family’s overall cost of living. Landlords include property taxes in the rent they charge to their tenants, so property taxes effect renters as well as property owners alike. Whether a family pays a mortgage or a rent, housing costs always take the biggest chunk out of a family’s monthly budget. Once the mortgage or the rent gets paid, many families find themselves counting down the days until their next payday. This means that property taxes have a much greater adverse effect on poor families than they do on wealthy families and that makes it inherently regressive. Because of their ever-growing nature, property taxes affect poor families more adversely than any other kind of tax.

Property taxes leave local residents in a perpetual state of uncertainty. Whenever land gets taken off the tax rolls, other landowners have to make up the difference. So, when the Central Public Power and Irrigation District purchased 1,050 acres of land on the south shore or Lake McConaughy, it left a revenue hole that others had to fill. That land will now go off the tax rolls and local residents will have to make up the difference in higher property taxes.

The property tax is a Marxist tax that never ends. Like the song that never ends, property taxes go on and on, my friends. Because of the never-ending nature of the property tax, landowners never actually own their property; instead, they merely rent it from the government. If you believe you own your real estate, try going three years without paying your property taxes. Then you will find out who really owns your property. Ownership of private property is a fundamental right which comes from God. The eighth commandment of Exodus 20:15, “Thou shalt not steal,” implies that God believes in private ownership of property. Private property is foundational to our American form of Government. Thomas Jefferson said, “The true foundation of republican government is the equal right of every citizen in his person and property and in their management.” The abolition of private property, on the other hand, is a central tenet of Marxism. The first principle of the Communist Manifesto states: “The abolition of property in land and application of all rents of land to public purposes.”

The property tax is logically absurd. The property tax is logically absurd because it is worse than a tax on unrealized gains. An unrealized gain (or loss) occurs when the value of an asset has increased (or decreased), but has not yet been sold. So, a tax on an unrealized gain is a tax on the potential earnings of an asset, such as a stock or a bond. Sen. Steve Halloran of Hastings called taxing unrealized gains “a stupid idea” when he rhetorically testified on his own bill, LB 1279, last week. LB 1279 is a bill that would tax unrealized gains. LB 1279 was never intended to be a serious bill. Sen. Halloran introduced it in order to make a political statement. In his own words, Sen. Halloran commented about his bill that, “Sometimes you have to illustrate the absurd by being absurd.” Nevertheless, what makes the property tax even worse than a tax on unrealized gains is the fact that the property tax not only taxes the potential earnings of a property but taxes the value of the property itself. To draw an equivalent analogy, it would be like adding the unrealized gain of a bond plus the original principle of the bond to a person’s income for income tax purposes, and that’s exactly what property taxes do!

Rep. Monks of Idaho was absolutely correct when he said that taxing property is evil. Nebraskans deserve a tax system which respects their largest monthly expense, a tax system which does not tax them into oblivion, at tax system which does not adhere to Marxist principles, and a tax system which is not logically absurd. In short, Nebraskans deserve a tax system that is not evil. I introduced the EPIC Option Consumption Tax last year to correct these problems and to restore a sense of sanity and common sense back to Nebraska’s broken tax system.