Taxation of Real and Personal Property - Explained
What is Property Tax?
Written by Jason Gordon
Updated at September 24th, 2021
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Table of Contents
What is Taxation of personal and real property?Discussion QuestionPractice QuestionAcademic ResearchWhat is Taxation of personal and real property?
Property taxes are a form of direct tax on the real and personal property owned by individuals or businesses. Property taxes (primarily on real estate) often fund local schools, police, and county administration. A common tax on personal property is a tax on the value of ones personal vehicle, commonly known as ad valorem taxes or business equipment and inventory.
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Discussion Question
The US Constitution includes the ability of the government to tax individuals. Do you feel that this power is overly broad? Why or why not? Should this power extend equally to the state and local governments? Why or why not? Should there be any specific limits on this power? Local property taxes are often linked to funding for schools, police, and fire departments. How does income level and property values relate to quality of public services? How do you feel about this method of funding for these public services?
Practice Question
The town of Pleasantville is considering building a new high school building. To raise funds for the project, what are some of the towns options?
- When trying to raise funds for public use, such as building government facilities, the organizers can apply to have some of the taxes collected from property in the area to be directed to the project.
Academic Research
- Gurdgiev, Constantin, Land Value Taxation and Other Measures for Raising Public Investment Revenue: A Comparative Study (March 27, 2012). Available at SSRN: https://ssrn.com/abstract=2029515 or http://dx.doi.org/10.2139/ssrn.2029515