Taxing the value of existing property creates two problems. First,
someone has to assess the current market value of the property that may
not have changed hands in many years. Because the assessment is only
an estimate, it is always subject to challenge. Second, sometimes owners
of valuable real estate property have low incomes and thus have difficulty
paying the tax from their available funds.
The progressivity of the property tax has been studied extensively. The
rich typically live in more expensive houses than the poor and thus
typically pay more in property taxes. This does not mean, however, that
the rich pay more property taxes as a fraction of their total income than the
poor. Thus, it is not readily apparent that property taxes are progressive.
Indeed, most studies have shown that the property tax is mildly
regressive.