A Property Tax Alternative: The Home Consumption Tax

Jake pursues Daniel across the lawn for non-payment of property taxes.

Big Tax Increases

Last year my property taxes increased from $740.06 to $938.13, an increase of 26.76%. This year my taxes were raised to $1,062.94, an increase of 14.22%. So over the last two years the increase is an enormous 44.8%. As a software developer you might think my pay increases would counter this raid on my bank account. Really? 2006 saw a 3.8% raise and 2007 delivered a 5% pay cut. Additionally, in 2007 my wife switched from full-time to part-time work. Before kind hearted soul you rushes to send me a check I hasten to add my finances are in very good shape.

Property Tax Defects

If my property taxes seem low I must point out dear reader that compared to other states they are indeed low but in Utah we have a lot of other taxes to pay. My property taxes are in line with what my neighbors pay. So rather than write a post that only complains, I would like to propose a solution. But first let us look at the defects in the current system:

  • Assessments are hard to kept current.
  • Large increases in property values bring government tax windfalls.
  • Property improvements without a permit escape taxation.
  • The burden is on the homeowner to prove false an over valuation.
  • You can lose your home if property taxes are not paid.
  • A bureaucracy is needed to run the program.

I am sure you can think of some more problems with the way property tax is administered.

No More Property Tax

I sound like a campaigning politician with my No More Property Tax mantra. But consider that the quickest way to reduce cost is to cut out the overhead and/or simplify the process. The taxes must be collected so the key is to use an existing system of collection. Now it would seem fair to tax on something related to the property. In addition the tax should fall a little heavier on those able to pay.

Home Consumption Tax

Any heading that has Tax in it is not a very pretty sight. Nevertheless, as a separate line item on your utilities will appear a Home Consumption Tax or HCT. These are the utilities that will have the HCT:

  • Electricity
  • Water (excluding secondary water)
  • Garbage
  • Natural Gas

I was tempted to add phones to the list but they are heavily taxed already, and VOIP phones would avoid the tax. Besides, phones consume very little resources. Each of the items in the list can have a different tax rate if desired. Also the option to exempt from HCT the first $20 of say, electricity and natural gas could be implemented, thus helping the poor.

Summary

  1. We have scrapped an inefficient system.
  2. Utilized an existing collection process to fund county government.
  3. Based our new HCT on consumables that are billed monthly instead of yearly.
  4. Significantly reduced the chances of home loss through non-payment of taxes.
  5. Eliminated huge tax windfalls.
  6. HCT assessments are automatic and accurate down to the last drop, amp, and BTU.

Well, my friends, pick holes in my proposal but don’t tax me too much with your contrary insights. I do believe my HCT would work rather well.