Inclusion of personal property in the same tax base with real property reflects the vestige of an assumption of property homogeneity that characterized the first part of the nineteenth century. "Things," real and personal, measured an individual's affluence--and probably also reflected reasonably well the cost of provided public services, mostly protective, to those things. Society has changed, but the case for merging these properties largely relies on the extent to which those old links continue.
Problems with retaining the tax encompass both logic and practice. Governments have not solved the problem of locating taxable items and must rely on self-reporting by owners, often with minimal administrative verification or audit. Indeed, the skills developed for real property assessment do not translate well to the accounting record reviews needed for personal property auditing. Second, assessment standards normally differ for the property types. While real property is appraised according to the current market value standard, personal property is typically appraised by an original-cost adjustment formula. This formula may or may not be calibrated toward a market standard; often it is not, the test being uniform application of formula, not the relationship to market value expected of real property assessment. Finally, the personal property element has become limited to business property. Differences in the production processes of industries cause property holding to be more likely driven by the type of business than by the capacity of the firm to bear the cost of government. These are fundamental problems in the attempt at achieving traditional personal property/real property uniformity in a combined local property tax. Some may conclude, however, that holdings of personal property still represent a rational basis for distributing the cost of government. If so, the tax should be shifted to the state level and levied in a fashion that does not perpetuate the fiction of uniformity now in place.