Property taxation always seemed stupid and somewhat evil to me.Given a choice of income-, consumption-, or property- taxation, it seems to me that property-taxation would provide the least perverse incentive. http://en.wikipedia.org/wiki/Perverse_incentive Consumption taxation perversely punishes consumption, and income taxation perversely punishes productivity. The economic effect of either of those, therefore, is harmful. Property taxation, on the other hand, is simply rent on property that is also latently owned by various layers of government. If one wishes to pay less rent to the government, one is free to move to a less-desirable (e.g. smaller; less-conveniently located) property.
What if you happen to lost your income [...] You would loose your property
One could sell, and move to a less-expensive property. Then, the original property would be available to one who is more-productive. The economy, therefore, gains when low-productivity individuals sell expensive properties.
legal racketeering on something that is yours.
Actually, nothing within a governmental jurisdiction can be outright privately owned. Therefore, said property cannot be said to be outright "yours". A government always retains ultimate ownership of properties "privately owned" within its jurisdiction. If one wants to truly own his own property outright, he either needs to found it from scratch (and provide for all of the maintenance and defense needs), or buy it from some existing government. Buying a condo in Manhattan is usually not the same thing as buying it from its true latent owners: the borough of Manhattan, the city of New York, the state of New York, the nation of the United States of America, the North American Free Trade Agreement, and the United Nations.