When you were growing up, did you ever overhear your parents talking about the taxes that they had to pay every year on their home? Property taxes are a large source of revenue for state and local governments in the United States.

These types of taxes make up more than 30 percent of total state tax collections and more than 70 percent  of local tax collections. But property taxes aren’t just collected on your home. Continue reading to learn more about property taxes and the things that fall under this category.

Property taxes are commonly used to fund public school districts, build and maintain roads, finance police and fire departments, and other emergency services.

There are two types of property taxes. The most commonly known type is “real” property taxes, which include taxes on homes, land, buildings, and other structures. Every state in the U.S. assesses property taxes, although the rates vary widely. Currently, New Jersey has the highest average property tax rate.

The less commonly known type of property taxes are TPP or  “tangible personal property” taxes. TPP are taxes levied on vehicles and equipment owned by individuals and companies. As a company grows in size, it may need to buy more equipment or machinery. This often leads to higher tangible personal property taxes. 

Some economists disagree with the practice of taxing TPP because they believe that this particular type of tax discourages businesses from expanding. Some believe it discourages them from investing in new equipment, which may lead to a negative impact on the overall economy. 

The specifics of TPP taxes are also often debated as the rules and regulations for what is taxed are complicated and favor certain types of businesses over others.