[From Vol. 3, Productive Resources,
from the Chamber of Commerce of the United States series, Understanding
Economics, 1966. Prepared under the direction of Carl H.
Madden, Chief Economist]
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The above description of rent, reflects the broad treatment
of the subject by economics professors and the textbooks of the
period. The fact that location values are societally-created
and, therefore, ought to be collected for societal use in providing
public goods and services is not addressed. In Volume 7 of the series,
Government and the Economy, the authors make the following
observations regarding locally-imposed property taxes:
"The property tax is inflexible and can be
discriminatory. In depressions, when real estate values fall, the
tax can lead to foreclosures. In good times, the tax may move up,
but not as fast as incomes. The tax is levied on wealth, not
incomes, so that its bite is bigger on fixed-income
receivers with property. This helps explain why local associations
of property-owners have many older retired people among their
numbers and why they oppose tax increases.
Assessments may also understate the values of expensive property
more than those of medium-priced property. Good local governments
try to conduct, periodically, reassessments which agree on a fixed
assessment-to-market value ratio such as 50 per cent, and apply it
to houses in all market-price ranges. Politically, such a move is
not easy. The property tax was fairer in a rural society, where both
wealth and income were usually connected with property, than it is
today, when wealth in real property need not be closely related to
income." |
