Is the Property Tax a regressive wealth tax?

I just listen to your program on housing. One point I never heard discussed is about how regressive property taxes are. Essentially a property tax is a tax on the value of the property that you own, your property "wealth". Most home owners have a mortgage where the bank owns much of your home, so you are therefore paying a wealth tax on wealth that the bank actually owns. For most Americans, most of their wealth is tied up in their home, but for the wealthy their home (or homes) is usually a small percentage of their total wealth. Therefore a typical American that still owes 50% of his home's value on his mortgage and say pays 5% property tax is actually paying a 10% wealth tax. (You own a $200,000 home but owe $100,000 on the mortgage. You pay $10,000 for a 5% property tax. This is 10% of the actual property wealth you own.) A rich person who only has 10% of his wealth tied up in his home and the rest in financial assets is paying at a 0.5% wealth tax rate. The wealthiest Americans really pay the lowest rates of our only yearly wealth tax. Is this a correct deduction?

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  • Vern Stevens
    published this page in Ask Prof. Wolff 2017-03-25 18:22:36 -0400