To evaluate the property tax is to test it by various criteria for a good tax and to compare it, in each of these tests, with possible substitute taxes—here, an income tax and a retail-sales tax. In the evaluation to follow, three unconventional techniques will be used. They are:
1. The property tax will be referred to as the real-estate tax. In most jurisdictions the element of personal property, business or not, is slight; business machinery and inventory make up the chief exceptions. Calling this tax a property tax makes it too easy for us to slip into assertions that are correct only for a tax that does indeed reach all property equally.
2. The real-estate tax will be considered to consist of two quite distinctive taxes, markedly different in their economic and social effects: a tax on housing, including rental housing, and a tax on business property. 1
3. The criteria used to judge the tax will be divided into two groups: first, criteria to which virtually everyone will immediately agree (equal treatment of equals and economic efficiency); second, criteria on which differences of opinion will arise. 2 The criterion of economic growth is an example of the latter; it is a conflict-of-interests criterion, because it inevitably reflects a conflict of interests or opinions. Economic growth sounds attractive to everyone until it is recalled that, in general, economic growth can be obtained only by restricting present consumption or working longer hours. Not everyone will agree that an increment of capital formation is worth the decrement of current consumption or of leisure.____________________