Property taxes should be abolished, argues John Steele Gordon, a contributing editor at American Heritage magazine. Gordon says they violate the principles of sound taxation which Adam Smith described in "The Wealth of Nations" -- most importantly that people should pay taxes "in proportion to the revenue which they respectively enjoy...."

Using examples from his own town of North Salem, N.Y., Gordon makes these points:

• Property taxes began in the American colonies because almost all real property produced income at that time -- but today nearly all residential property is income-absorbing.

• Middle-class owners of a typical median-priced house usually pay, as a proportion of their income, many times more than what a high-income owner of a lavish house must pay -- more than 20 times as much in Gordon's example.

• Residential property taxes are not easy to administer -- another Adam Smith principle -- with North Salem employing four full-time employees and a grievance committee to administer taxes in a town of only 4,800 residents.

• In a system that relies on subjective, rather than objective, valuations of property, the opportunities for mischief are considerable.

Gordon points out that property taxes often force the breakup of large holdings, contributing to suburban sprawl.

An alternative might be a supplement to the state income tax. The state would tell the town and school district what the total net taxable income of their residents was in the previous tax year. Then the town or school district would tell the state how many percentage points to add on to the state income tax rate to produce the needed local revenue.