One of the many reasons former Vice President Kamala Harris was soundly defeated in her 2024 presidential campaign was her support for a perennial Democrat proposal to tax unrealized capital gains—conjectural increases in the value of unsold assets. But the reality is that millions of Americans already pay a similar tax on “paper gains” based on the estimated value of their homes.
Such taxes are not only an affront to the concept of private property, but they have now become such a burden to homeowners that some Republicans are leading a movement to dramatically reduce or abolish them altogether.
Property taxes have been rapidly rising in recent years as the appraised value of houses has skyrocketed. This development has been particularly devastating for middle-class Americans, who must pay these taxes year after year despite having never sold their homes.
On a fundamental level, property taxes are an assault on the financial independence of American families. The American Dream, at its core, is about property ownership. Those first settlers who risked everything to board rickety ships and cross an ocean did so for many reasons, but property ownership was chief among them.
Property taxes effectively render the term “home ownership” meaningless in the United States. How can one truly own something on which he must pay the government a certain sum of money every year, or else the government will come and take it from him at gunpoint?
Because property taxes are indeed taxes on unrealized gains and most property “owners” understand that all too well, there is growing pressure from taxpayers to eliminate them. This is particularly true in states to which many have migrated to escape the increasingly incompetent Democrat governance in blue states like California, Illinois, and New York.
A top destination for these political émigrés is, of course, Florida.
Not coincidentally, Florida Gov. Ron DeSantis (R) is leading a high-profile effort to curtail property tax inflation. According to a report in Newsweek, “DeSantis has said that he is working on a ‘concrete proposal’ to drastically cut or even eliminate property taxes in the state, an initiative that he has pledged to put before voters next year.” DeSantis must amend the state constitution to eliminate property taxes altogether. Consequently, he is working with state lawmakers on a ballot initiative for 2026 and says the legislature is fully on board.
How does domestic migration from poorly governed blue states to well-run red states drive up house appraisals and spikes in property taxes? The value of houses, like everything else, is a function of supply and demand. If the demand for houses in Florida rises faster than the supply of homes for sale, the value of the latter inevitably increases. This is precisely what has happened in Florida and many of the other 22 states in which Republicans enjoy governing trifectas.
Still, increased demand for housing in red states only explains half of the problem.
In a healthy economy, unencumbered by perverse incentives, a spike in demand for housing would motivate builders and developers to increase production. Before long, the quantity of housing would catch up with the quantity demanded. The resultant equilibrium would end the upward spiral in the appraised value and property taxes for existing homes.
Why didn’t that dynamic manifest itself to prevent the current situation? In a word: Bidenflation. When inflation blew past 9 percent in 2022, the cost of building new homes became prohibitive.
It is no coincidence that widespread property tax revolts broke out only twice in the last 50 years – when inflation skyrocketed during the Jimmy Carter presidency in the late 1970s and during the Joe Biden presidency in the early 2020s. Inflation comes with perverse incentives that go beyond the prohibitive cost of the materials and labor needed to physically build homes. The elevated interest rates imposed by the Federal Reserve to control inflation also reduce the amount of money banks can risk on speculative construction loans to builders.
The high interest rates imposed by the Federal Reserve also put upward pressure on mortgage rates. This means that first-time buyers are having difficulty qualifying for loans to buy one of the few homes available on the market. High interest rates also serve as a disincentive for current homeowners to sell houses they bought before Bidenflation arrived. Why would any sane homeowner with a 3.5 percent fixed-rate mortgage sell their house knowing they will very likely be forced to pay double that rate on their next house?
Yet, as The Wall Street Journal’s Will Parker explains, that current homeowner is still getting hammered on property taxes. He discusses it from the perspective of someone who bought a house as recently as 2020: “You hadn’t seen the huge takeoff in prices yet, and you still could get a mortgage for less than 4%. So he did that. But since that time, the value of his home has risen quite a lot. And he finally got a new tax assessment that told him that your house has risen about 30% in value, and so your tax bill is going to be 25% higher now.”
Growing anger over this dynamic has caused a number of states to offer some relief to homeowners. In 2023, these states passed statutes curtailing property taxes: Arkansas, Colorado, Indiana, Iowa, Missouri, Montana, Nebraska, North Dakota, Pennsylvania, Texas, and Wyoming. In November of 2024, ballot measures to cut taxes for property owners also passed in Arizona, Florida, Georgia, New Mexico, and Virginia. Conspicuously absent from these lists are states with the highest property taxes: New Jersey, Illinois, New Hampshire, Connecticut, and Vermont.
State actions are useful, but as Florida Gov. Ron DeSantis points out, “Property taxes are local, not state. So we’d need to do a constitutional amendment (requires 60% of voters to approve) to eliminate them (which I would support)… taxing land/property is the more oppressive and ineffective form of taxation.”
Some of the growing backlash against property taxes may be a result of the demographic shift ongoing in the United States. Jay A. Soled, chair of the Department of Accounting and Information Systems at Rutgers Business School, opines, “As America greys, there may be increasing pressure to reduce property taxes.”
A recent conversation your humble correspondent had with his 12-year-old grandson perhaps provides a clearer glimpse into the “common sense” argument against property taxes. Having been told that people who worked all their lives to pay off mortgages in order to own their homes free and clear still must pay city, county, and state taxes on that property, his response was unambiguous: “That’s stealing.”
He has no grey hair, but it’s difficult to gainsay his succinct and wise observation.
David Catron is a Senior Editor at the American Spectator. His writing has also appeared in PJ Media, the American Thinker, the Providence Journal, the Catholic Exchange and a variety of other publications.
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