"why do states have mandatory reporting laws?" Is there a particular necessity for states to know how much you paid for your property? If they're basing your property taxes based on the sales price, I can see why, but why base your taxes on a sales price which can differ so widely from home to home in the same neighborhood depending on if the home was purchased during a housing bubble or a housing depression?

No easy answers for any of these questions, you just have to recognize different states have their different laws.