Friday

 

The Property Taxes Abolition Debate

Five U.S. states are considering ending property taxes. How would these revenues be replaced and how would this be an improvement?

Gemini:

Several states are currently exploring the "abolitionist" approach to property taxes, moving beyond simple relief like caps or credit toward complete elimination for homeowners.

As of early 2026, the five states leading this charge with specific legislative or ballot proposals are Florida, Georgia, North Dakota, Indiana, and Texas.

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The Five States and Their Replacement Strategies

State and Primary Replacement Strategy

-Florida

Consumption Tax Shift:

Proponents suggest a constitutional amendment to abolish non-school property taxes on homesteads, potentially making up the $19 billion gap through increased sales taxes or spending cuts.

-Georgia

Phased Sales Tax/Fees: A plan to phase out homeowner property taxes by 2032.

Lost revenue would be replaced by local option sales taxes and specific "line-item" assessments for services like fire or trash.

-North Dakota

Natural Resource Wealth:

The state aims to use earnings from its $13 billion Legacy Fund (derived from oil and gas taxes) to subsidize and eventually eliminate property taxes for primary residences.

-Indiana

Income Tax Pivot: House Bill 1288 seeks to end property tax collection by 2027.

The proposed gap would likely be filled by shifting the burden to local income taxes and state-level surpluses.

-Texas

Surplus Buying-Down:

Governor Greg Abbott has pushed to use the state’s massive budget surpluses to "buy down" school property tax rates until they reach zero, effectively replacing them with general state revenue.

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How This Is Viewed as an Improvement

Proponents of these shifts argue property taxes are fundamentally flawed and eliminating them would improve the lives of citizens in several key ways:

-"True" Homeownership:

One of the most common arguments (used by officials in Florida and Pennsylvania) is property taxes turn homeowners into "tenants of the government."

Eliminating the tax means once a mortgage is paid off, the owner truly owns the asset without the risk of losing it to a tax foreclosure.

-Protection for Seniors and Fixed Incomes:

Since property taxes are based on home value rather than cash flow, they often penalize retirees whose home values and tax bills have skyrocketed while their incomes remain flat.

Moving to sales or income taxes aligns the tax burden more closely with a person's actual ability to pay.

-Increased Transparency:

In plans like Georgia's, replacing a lump-sum property tax with specific assessments for fire, police, or sanitation creates a "receipt" style of government.

Proponents argue this makes it easier for taxpayers to see exactly what they are paying for and hold local officials accountable for spending.

-Economic Competitiveness:

States like Texas and Florida view "zero property tax" as the ultimate lure for businesses and high-net-worth individuals, arguing it would further boost migration and capital investment compared to states with high recurring ownership costs.

-Intergenerational Wealth:

By removing the annual property tax "carrying cost" of a home, proponents argue families can build and pass down wealth more effectively.

This allows the home to act as a more stable vehicle for long-term financial security.

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What are arguments critics are making against these plans?

Critics of these proposals —ranging from non-partisan tax experts to local school boards— argue property taxes are the "least-bad" option among a set of difficult choices.

They contend while property taxes are unpopular, the consequences of abolishing them could be more damaging than the taxes themselves.

The primary arguments against these plans include:

1. The "Mathematics of Replacement"

Property taxes are the single largest source of revenue for local governments and schools.

Massive Sales Tax Hikes:

The Tax Foundation estimates to fully replace property tax revenue nationwide with a sales tax, the average state rate would have to skyrocket from roughly 7% to over 15%.

Critics argue this would lead to "tax border wars," where residents drive to neighboring states to make major purchases.

Unreliable "Backfilling":

Plans that rely on state budget surpluses, like those in Texas, are criticized as unsustainable.

Critics point out surpluses can vanish in a recession, leaving schools and emergency services with massive, sudden budget holes.

2. Economic Volatility

Property values are relatively stable and change slowly.

In contrast, sales and income taxes are highly "volatile."

Recession Risk:

During an economic downturn, people spend less and earn less, causing sales and income tax revenue to crater.

Critics argue relying on these sources would force local governments to make deep, painful cuts to police, fire departments, and schools exactly when the public needs those services most.

3. Regressivity (The Burden on the Poor)

Replacing property taxes with sales taxes creates a "regressive" tax shift.

Spending vs. Wealth:

Lower-income families spend nearly 100% of their earnings on taxable goods (food, clothes, household items), while wealthy families save or invest a large portion of theirs.

By shifting the tax to consumption, critics argue you are effectively raising taxes on the less rich apartment renters to give a tax break to richer home owners.

4. Loss of Local Autonomy

Property taxes are one of the few revenue sources local communities control directly.

Dependence on the State:

If funding shifts to the state level, as in proposals in Indiana and North Dakota, local school boards and city councils lose their independence.

They must "beg" the state legislature for funding every year, which can lead to political favoritism where certain districts are prioritized over others.

5. Market "Lock-in" and Housing Supply

Some economists warn eliminating property taxes could actually make the housing crisis worse.

The "Lock-in" Effect:

If property taxes are zero, there is less financial incentive for older homeowners to downsize from large family homes they no longer need.

This can reduce turnover in the housing market, leading to lower inventory and even higher prices for first-time homebuyers.

6. Shifting Costs to Individuals

In states like Georgia and Florida, some replacement plans involve billing residents directly for services like fire protection or trash pickup.

Critics point out these "service fees" are essentially property taxes under a different name, often with less oversight and no ability for low-income residents to claim exemptions or credits.

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Is there a split between Republicans and Democrats over favoring eliminating property taxes?

Yes — there’s a clear partisan split.

Republican Party

More likely to support eliminating or sharply reducing property taxes, arguing they:

-Burden homeowners - especially retirees on fixed incomes

-Penalize saving/ownership

-Slow economic growth, by discouraging investment in homes and commercial buildings, raising the cost of doing business, and reducing long-term capital formation, since owners are taxed every year simply for holding and improving property

Democratic Party

Generally oppose eliminating property taxes because they are viewed as relatively stable and progressive compared to sales taxes.

Democrats usually favor reforms (caps, credits, circuit breakers) rather than repeal.

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Is one reason Democrats are against ending property taxes is because they are under local control and can be raised to provide more social services?

Yes — that’s a major reason many Democrats resist eliminating property taxes.

For the Democratic Party, property taxes are attractive because they:

-Stay under local control (cities, counties, school districts decide rates)

-Can be raised when communities want expanded services — schools, housing programs, transit, social support

-Provide a stable, predictable revenue stream that doesn’t fluctuate as much as sales or income taxes

In practice, that means local governments can more easily fund and expand public services without relying on state legislatures.

By contrast, when property taxes are cut or abolished, funding usually shifts upward to the state level where funding for increases in local spending on public services may be refused.

Bottom line: Property taxes give local governments both money and autonomy — tools Democrats generally favor for delivering public services.

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Table 1 is a side-by-side look at the main arguments for and against ending property taxes — the same points typically debated between advocates - more common in the Republican Party, and opponents -more common in the Democratic Party.