Property taxes are a rounding error compared to the value of even a small warehouse full of modestly priced consumer goods, talking far less than 1%, especially in industrial areas.
It might be a factor in very low priced bulk goods like gravel or something, but I would be shocked even then.
Property taxes are based on a poor approximation of what a property would be expected to sell for. The relationship between that and the size or nature of the business operating there is highly attenuated, and it's almost entirely decoupled from how much traffic a business generates on any particular road.
Property tax is a percent of property value or at least it is every where I have ever lived. Last I checked housing was ahead of inflation pretty uniformly until recently.
Counterpoint: higher property taxes force property valuations to be based closer to the “current use” value (ex, what is the value of this house based on its use as a place where someone lives), lower property taxes allow property valuations to be based on the “speculative” price (how much will this land be worth in 40 years, regardless of how I use it now). In general, jurisdictions with low property taxes have a combination of high property values and more rundown buildings/land banking/speculative investment (where speculative investment means owning an empty lot or vacant lot in a highly productive urban area for 40 years) as the carrying costs are lower (houses are valued more on the “what will this be worth in 40 years” and less on “what is it worth for me to use this house as a house right now”)
Yeah, I think it's tied to the costs of running a particular store, and maybe other factors, like local competition. Higher property taxes will generally mean more markup.
so just property tax then, like an empty warehouse holds the same tax burden as one filled to capacity with inventory? I thought someone was suggesting more than property tax.
"...so you hold onto properties realistically valued at multiple millions while paying taxes at rate appropriate to tens of thousands."
Doesn't that make the tax percentage very low when prices have risen so much? And in addition the percentage varies from unit to unit, even if they are identical in all aspects (including their value) except when it was last sold. What a weird system.
Why would tax decrease linearly with the prices of the property? The residential property taxes I've seen are just a flat percentage of assessed value.
Property taxes are low? Where is this the case? Most communities base property taxes on millage (percentage) of property values which have been going sky high.
The lack of reasonable property tax is a big part of pushing valuations into the stratosphere. Look at the outrage over the "mansion tax", for example, which would only apply to million-pound homes.
Apparently socialist New York has a 1.8% property tax? Edit: Austin, Texas has 3% property tax! If you tried that in the UK you'd be denounced as a Communist.
I don't have data as to precisely how strong the correlation is
I'm actually pretty curious now, and might be go looking for data. It's surely not precisely 1, but I bet it's not all that far off. Especially if you limit the sample to residences.
Your list of outliers is a good one (I particularly like the natural resources one), but I think they're probably mostly exceptions to the rule.
In the end though sure, property taxes aren't precisely consumption taxes. But they clearly aren't wealth taxes either. They're something in between and, I think, much closer to consumption that wealth.
I've really enjoyed thinking about the points you brought up. Thank you for doing that.
It might be a factor in very low priced bulk goods like gravel or something, but I would be shocked even then.
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