Property tax

• 1. Introduction

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  Property tax reaches back roughly six thousand years, to clay tablets found in the city-state of Lagash, in what is now Iraq. Those tablets recorded a system called bala, meaning rotation, where each month a different area of the city was taxed to spread the burden. Since then, almost every government on earth has found its own version of the same basic idea: if you hold land or buildings, you owe something to the authority that governs that ground. What exactly you owe, and how it is calculated, varies so wildly between countries that comparing them can feel like comparing entirely different concepts. In some places, your tax bill arrives as a percentage of what your home would fetch on the open market. In others, it is pegged to the floor area of the building, or to a theoretical rental value, or to a rate that has not been updated since 1935. The questions this documentary will pursue are: where did this tax come from, who actually pays it, and what does it reveal about the relationship between a citizen and the state?

• 2. Ancient Roots

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  In ancient Egypt, tax assessors walked the land counting cattle and measuring crop yields against the value of grain, oil, beer, and land. At that time only one person in a hundred could read, and many of those literate few were assessors. Their records tracked who owned which plot and how large it was. A taxpayer who could not pay was brought before a court. The assessors were regarded as skilled and respected figures, precisely because they held the power to quantify what others owed.

  In medieval England, peasants renting land from a lord paid taxes proportional to how productive the land was. During the 1070s, William the Conqueror established an early form of land taxation, and cities began keeping systematic records of property ownership. After 1215, King John was constrained by his barons from raising revenue without their consent. By the 16th century even the King's own land was subject to taxation. After 1689, a new law meant the monarch could not tax at all without Parliament's approval, a shift that gradually transferred fiscal power away from the crown.

• 3. The American Story

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  When the Pilgrims landed at Plymouth in 1620, they formed a pact that included taxation. Each settler received an equal portion of land from which tax was owed. In Boston, Puritans introduced a property tax to pay for church expenses and religious education, and every resident paid it regardless of their own religion. That system lasted for more than a hundred years. The sheriff served as assessor, and the records followed the English model of tracking personal estate. A widow with children was not only forgiven her tax but was guaranteed a monthly stipend. Those who destroyed public property paid the repair costs through property tax.

  After 1776, a dispute emerged between Alexander Hamilton and Thomas Jefferson over where taxes should be collected. Hamilton wanted central collection of property taxes to grow the government's financial capacity. Jefferson favored local revenue collection as closer to democratic principle. Hamilton's broader financial vision helped build the capitalist system the United States still operates under, but his push for high national property taxes ended badly. A national property tax was enacted by Congress and apportioned by population, then met with widespread protests until it was repealed.

  At the start of the 20th century, reformers concluded that the existing tax system could not fairly reach a complex modern economy. The result was a narrower personal property tax focused on homeowners and intangible assets. During the Great Depression, as incomes fell sharply, property tax collection rates dropped with them. Many governments cut property taxes and introduced sales taxes instead. After the Depression, organized movements pushed for broader reforms, many of which passed and remain in force today.

• 4. How the Math Works

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  A property tax rate is most commonly expressed as a percentage or as a mill rate, where one mill equals one-thousandth of a currency unit. To calculate the tax, a government multiplies the assessed value of a property by the mill rate and then divides by one thousand. A property assessed at a given value in a municipality with a mill rate of 20 mills would carry a specific annual bill calculated that way.

  But the assessed value is itself a construct. In France, the base is 50 percent of the cadastral rental value, a theoretical figure representing what the property could rent for, adjusted each year by a government revaluation coefficient that stood at 1.012 for 2020. In Ireland, the system uses bands of market value, with a national central rate of 0.18 percent on property worth up to one million euros, and 0.25 percent on any value above that. Local Irish authorities can adjust that rate up or down by as much as 15 percent from the national figure. In Germany, the tax burden is calculated by multiplying the official assessed value by the real property tax rate, which ranges from 0.26 to 1 percent depending on the federal state, and then by a communal multiplier that the individual municipality sets independently.

  The differences between countries are not merely technical. They reflect different philosophies about what the tax is measuring: the land, the building, the income the property generates, or the wealth the owner has accumulated.

• 5. Exemptions and Vacancy

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  Across nearly every system, certain categories of property are sheltered from the tax entirely. Religious buildings, public infrastructure, diplomatic properties, and land used for charitable or educational purposes appear on the exemption lists of country after country. Germany exempts non-profit organisations that pursue charitable, religious, cultural, scientific, or educational purposes, as well as churches and religious communities using property exclusively for those purposes. Slovakia exempts land and buildings owned by universities and by the Slovak Academy of Sciences when used for research.

  France introduced a tax on vacant properties in 1999, and that measure reduced the vacancy rate by 13 percent. Israel taxes vacant apartments at double the rate of occupied ones. France also operates the taxe annuelle sur les logements vacants, which applies if an unfurnished dwelling in a tight housing market has been left empty for at least one year, and a separate tax payable to municipalities that choose to implement it, applying to homes unoccupied for more than two years.

  Germany's 2018 Constitutional Court ruling found that property tax assessment had violated the Basic Law's guarantee of equality before the law. The court noted that standard values used in the former West Germany had not been updated since 1964, and those used in the former East Germany dated from 1935. A reform followed, requiring all property owners to submit reassessments as of the 1st of January 2022 to fiscal authorities by the 31st of January 2023. New property taxes calculated from those updated values will be levied from the 1st of January 2025 onwards.

• 6. What Governments Do With It

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  In the United States, the national government levies no real estate tax. State governments collect about 3 percent of the total. The remaining 97 percent goes to counties, municipalities, school districts, community colleges, libraries, museums, parks, and bridge authorities. Property tax is the main source of funding for local education, police, fire protection, and most infrastructure including sewers, bridges, and street lighting.

  In Germany, property tax revenue amounts to almost 15 billion euros annually. That money funds schools, libraries, daycare centers, and local infrastructure projects at the municipal level. In Canada, property tax is the major source of revenue for most municipal governments, covering services that range from public transportation to fire and emergency services. In Québec specifically, property tax revenue pays for the fire and police departments, public transportation, and elementary and secondary education.

  Luxembourg stands out as a notable contrast. Its property taxes are minimal compared to its neighbors in Benelux and the European Union. A 500,000-euro apartment in Luxembourg City might generate a tax bill of around 150 euros, an amount that reflects the very low rates set by the communes.

  Armenia's property tax to GDP ratio is 0.2 percent, well below the 2 percent global average. Starting in 2021, Armenia shifted to calculating property taxes based on market value prices, removed the previously existing non-taxable property threshold, and set a minimum rate of 0.05 percent.

• 7. A Tax Under Criticism

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  Critics of property tax argue that it exposes an uncomfortable truth: so-called property owners are, in a meaningful sense, permanent tenants of the state. The government can evict an owner for failure to pay. In Southfield, Michigan, a resident lost her home, valued at nearly $300,000, after missing a $900 property tax payment. The town refused her late payment and confiscated and sold the home. Critics describe such cases as fairly common and point to them as evidence that property tax poses a genuine threat to property rights, due process, and the rule of law.

  The United Kingdom occupies a position that stands apart from most OECD nations. Ownership of residential property or freehold land is not directly taxed in the UK. Instead, the Council Tax is typically paid by the resident, not the owner. The Valuation Tribunal Service describes it as a mix of a property tax and a personal tax, with a full charge when two or more people live in a dwelling, 75 percent if one person lives there, and 50 percent for an empty property. When purchasing property, buyers pay Stamp Duty Land Tax, a progressive tax that as of 2023 exempts primary residences worth up to £250,000 for UK residents. Scotland replaced that tax with its own Land and Buildings Transaction Tax in 2015, and Wales introduced the Land Transaction Tax in 2018, each with different bands and rates but with neither including a non-resident surcharge.

  In Hong Kong, the property tax is not an ad valorem tax at all. It functions as an income tax, payable only when an owner receives rental income or a consideration for the use of the property. The net assessable value is set at 80 percent of the actual rental income received, and owners with no rental income pay nothing under this particular levy.