Tax Mechanisms and Ethics
If one goes down the rat hole of economic theories and morality discussions regarding various tax mechanisms the issues get predictably muddied with paralysis of analysis. The systems are often like a small aquarium of competing pretty fish and snails in that, if you don’t change the water often and then shortly suffer over population of the system, everything in there soon dies except microbial pests.
A partial list of major tax mechanisms in an ethics debate should include:
• income tax – flat and/or graduated
• real estate tax
• sales / consumption tax
• inheritance / estate tax
• value added tax
• intangible / tangible tax
• export / tariff tax
• license / permit / disposal fees
In Florida a debate is ongoing regarding sales tax vs. property tax as possible candidates for elimination during budget surplus moments. My humble opinion is the scales of moral justice reveal sales tax to be more ethical/fair than real estate tax, and therefore I would support eliminating the real estate tax before sales tax if able. Yet when I mention a preference on my part to a young voter it is sad to observe how often they react with a knee jerk reaction of how they would prefer to reduce sales tax rather than real estate tax saying, “because I don’t own a house anyway.” They are blithely unaware of how everything they buy and/or rent and/or reside in includes the property tax component. And the concept of how sales tax is a “graduated” tax impacting the wealthy more than the needy, precisely due to their spending budgets, gets lost in their initial naïve assumption of what would help their situation more.
Both sales tax and real estate tax are ethically superior to inheritance/estate taxes (which is somewhat like comparing apples to cyanide), but real estate taxes wind up destroying families, farming, and open spaces many prize as intangible benefits to a community despite the habits of ownership. Ultimately real estate taxes force “growth” and subdivision against owner wishes like Miralax can push stool. However, real estate taxation is hyper local governance at the County level whereas counting on the State Capital to function fairly over time and in future administrations does cause some complexity in the debate.
There is a lot to unpack if you want to kick these things around and change policy, but make sure you don’t just assume sales tax affects you more than real estate tax when you are not the owner… it does.
Ed Verner
