The main premise behind the property tax proposal is that
the government is delivering property security services to property owners in
direct proportion to the market value of their property. These services consist of the police, armed
forces, courts, and legislatures. With
a constitutionally limited government, no other government services are
required. The second premise is that
people should have the right to police protection of their person only without
paying a fee. That means that an orphan
or destitute person would be protected.
Thus the "best" taxes are the ones that are the
best proxy for market value of the taxpayer's property. So the simple taxation hierarchy
from best to worst is:
1- Voluntary "tax" on market value of property
2- Property Tax (Rates) based on government’s value
3- Progressive Income Tax
4- Flat Income Tax
5- Universal taxes on trade (eg. GST)
6- Arbitrary taxes (eg. sin taxes, stamp duties)
7- Head Tax
The economic argument for a property tax is that it is the
most efficient tax. It does this by
discouraging hoarding without significant disincentives to trade or wealth
enhancement.
So how would it work?
Property owners would declare a market value for their property. This would be public knowledge. Anyone could make an offer to buy the
property for more than the owner's declared value. Owners would have the choice of selling their property for more
than they declared it to be worth, or paying the flat rate of tax (say, 1%) on
the higher value. It would be up to owners
to price their own costs of re-location into their declared value. The tax would pay for all property
protection services provided by the government. People without property would only pay indirectly through their
rent.
The system would ultimately be voluntary. Property owners would have the right to opt
out and pay for their own property protection, but this would only protect them
from formal government action against them by the police or armed forces. Anybody else, including for example off-duty
police, would have the legal right to use force against them to take over their
property. In practice this would rarely
happen because the private security agencies would keep the peace.