Bacon's Rebellion

Tuesday Morning Group proposes legislative agenda

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by

James A. Bacon
in
Portions of a TMG press release: Property rights earned a measure of new protection in this year’s session of the General Assembly. But far more needs to be done. “The Agenda will fundamentally alter the balance of power between government and property owners,” said Del. Kathy Byron. “Too often, property owners are forced out of their homes or off their land because someone else has convinced the government they can do more with it. That’s dead wrong, and the Agenda will help us end this outrageous behavior.”

“Conservatives tackle high property taxes” ~ Daily Press:
http://www.dailypress.com/news/local/dp-98322sy0apr13,0,1378354.story?%20coll=dp-news-local-final

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Norm over at One Man’s Trash has been hinting at a comprehensive legislative agenda for a while, and the day has finally arrived. Norm posted on the Agenda here and here, and the AP has this story.
The Kaine campaign had this reaction: Kaine campaign spokeswoman Delacey Skinner called the coalition’s proposal “a more extreme version of Kilgore’s plan.” She also compared it to California’s landmark Proposition 13, which “has been disastrous for the public education system.” Property taxes are a large source of education funding.Proposition 13, approved by California voters in 1978, rolled back property taxes to 1976 levels and capped property value growth at 2 percent a year until the property is sold.Aitken said real estate tax revenue increased by an average of 10 percent annually in California in the decade after Proposition 13, despite the growth limit on property values.

~ courtesy of http://sicsempertyrannis.blogspot.com/
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*** Extreme, Tim ‘the choir boy’ Kaine’s spokewoman says?
“Oh no! I don’t think so,” says the ‘comfortably numb’ Blue Dog because your lips move but I can’t hear what you’re sayin’.
After hearing Tim Kaine’s speech about linking land planning and transportation last year at the Reconnecting Virginia event, for a second the Blue Dog thought Lt. Governor Tim Kaine might actually ‘Get It’ — With the VCN and VaLCV’s assistance, I can’t understand why you still do not understand the issue.

Nobody running in 2005 for Governor of Virginia does …

Kaine, Kilgore, Fitch and Potts: Please do your homework, because it seems like the politicians collective IQ’s have been dropping, specifically in regard to all things dealing with property taxes and transportation and land use.

“California’s Proposition 13 — a citizen anti-tax initiative — has turned out to be the most important planning law in the state. It has altered the nation’s attitude about how to pay for growth, and, in the process, has been a major force in shaping the urban and suburban landscape we see throughout the country today.”

How we pay for growth

Guest perspective:
California’s Prop 13 shapes urban, suburban landscape
Friday, June 06, 2003
By William Fulton

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  1. Norman Avatar
    Norman

    I can see it already, Steve: the gubernatorial campaigns are going to triangulate off the Agenda much the same way Warner was able to do in the ’04 tax debate. The conservatives are too hot, so Kaien and Kilgore will fight over who’s too cold and who’s just right. Of course ol’ Russ will splutter that the whole thing is just an evil plot to destroy the Commonwealth. And George Fitch? Hello? Must have had his line disconnected.

    I’m not sure how all this will play out, but the game is afoot and it will be fun to watch.

  2. Paul Avatar
    Paul

    Ahhh Planetzen. The source of hours of wonkery at work each week.

    I agree with the premise of the article, but I’m wary of this sort of thing because California schools are CRAP. C R A P, CRAP.

    Property taxes are outdated, I think we all agree on that. They lead to all sorts of bad outcomes (people being forced to move, incentives for sprawl, etc). But if we do away with them, can we replace the revenue, or will we just starve schools?

    So I guess what I’m asking: What’s the BEST TAX? Many people would say a sales/service tax. Some people like a moderately progressive income tax. I’m in favor of a combination of both, along with an estate tax and a hefty gasoline tax (with exemptions for commerce), and a small corporate income tax that is means tested to avoid small businesses. Get rid of the BPOL, property (car and house), and most sales tax exemptions.

    Reform the income tax brackets so that they look like they weren’t last indexed in 1920.

    Put constitutional protections on environmental, healthcare, higher education, and transportation trust funds.

    Ok, I’m done.

  3. Paul Avatar
    Paul

    Norman: Sometimes I worry that we’re all getting caught up in the hackish “both campaigns suck!” line that most op-eds take. But them I realize that yes, the platforms of both campaigns have serious flaws.

  4. Ray Hyde Avatar
    Ray Hyde

    Aitken said the only way to guarantee tax relief for suffering homeowners is to rein in rising values and the tax rate.

    The collective IQ’s must be dropping because neither the conservatives noted in the daily press, Californias proposition 13, or any of the other nineteen constitutional amendments have any effect on value. The value is what the market says it is.

    Now, taxes are something else again…. but the article from planetizen shows how hard it is to constrain government and how truly inventive bureaucrats can be when it comes to inventing new taxes and more complicated and expensive ways to get them.

    Taxes always increase until the revolution.

  5. Steven Avatar
    Steven

    Ahhh … the tax revolution!

    Please wake me up when it’s over.

  6. Norman Avatar
    Norman

    Ray,

    I agree that markets determine value. But consider this:

    I own shares in XYZ Corp. They rise in value (with the blessing) over the course of the year. I hold on to them, hoping for even greater appreciation.

    Now, the government will not tax me on the appreciation because I have not sold those shares. My gains are all on paper and could evaporate in the wink of an eye.

    Should I sell, and I’ve realized a gain, then I’m taxed. The market has done its work and the government has taken its cut (thanks for the help).

    Why should it be different for homes? Even if the market price for homes rises, and my neighbor sells, but I don’t, why should I be forced to pay a higher rate that reflects his gain? That’s absurd.

    The point of Al’s tax cap measure is to set the base for property taxes at the market price you paid for the property. The assessment rate can go up from there, somewhat. But you, the lucky person who decides to stay in your home, will not see your assessment rise to the level of those who did sell…and realized their gains.

    That is much closer to a market-based system. And the tax penalty falls more fairly upon those who buy and sell…not those who buy and hold.

  7. Laszlo Avatar
    Laszlo

    It’s the tax RATE as set by local elected officials that drives the tax bill. Didn’t anybody read Barnie Day. Where is Barnie when we need him.

  8. Bob Griendling Avatar
    Bob Griendling

    Ray,

    If you’re going to suggest we should tax capital appreciation of stocks and houses the same way, then please be consistent. Which means no more deductions for interest payments on homes. You can’t deduct borrowed money spent on stocks, why should you on homes?

  9. Mattaponi Avatar
    Mattaponi

    But Lazlo – aggressive tax cutters can hack away at the rate all day (month, year) and the tax bills will go up if market values are climbing. There is no way that an elected official can set a rate to what the market might be in a year. The assessments usually are below market in any event, but we still have instances where tough, conservative elected officials have tried successfully to drive down the rate, but the arithmetic of rising market values works wondrously to raise individual tax bills, depsite significant tax cuts. the only thing the local governments control is the rates. They cannot and should not control the market. The irony is that where you get guys running good local governments and doing their durndest to promote conditions that promote growth and make a community an attractive place to live, they are more likely to get gripes about the impact of rising market values. Sometimes, in the most extreme examples, they even get accused of “raising taxes.” (If you think I’m hallucinating, look at the nonsense that gets thrown at tax-rate cutters like Connaughton and, at least by implication, Fitch, by the Bolling/Rodokanakis claque). Obviously, the chatge is silly, and most people with triple digit IQs don’t buy it, but it illustrates the thankless nature of trying to administer a system where local govenrments must rely for core functions on an ad valorem tax on very high value assets. It will take a major departure from this system to get a fair, easily administered system. It may mean high income or sales taxes and more local control over these revenue streams. But it ain’t easy or simple and it will take leaders with a little more courage and imagination than the usual fare that gets served up in this great Commonwealth.

  10. Laszlo Avatar
    Laszlo

    A county can take a new assessment and set a tax rate that will make the overall revenue the same as the previous tax cycle. Revenue neutral, but this applies to the whole county and could still result in an increase in hot real estate areas. The bottom line is that some county officials like to hid behind the assessments as a way to increase revenue. The other problem is that real estate taxes are the main source of funds to pay for county services. Somebody has to pay for them.

  11. Paul Avatar
    Paul

    Ray – the reason why I like the estate tax is because I think it’s wholly American. We’re not an aristrocracy here. We’re all about hard work. And just becuase your pappy earned a bunch of money, you shouldn’t be THAT advantaged.

    I agree, small farmer’s should be exempted – up until $10 million. Warner tried to do that in 2004 (and if he had accomplished it, his tax increase would have been much smaller overall). But I think the senate blocked it…

  12. Dave Burgess Avatar
    Dave Burgess

    Yes Paul, it is the American way to work hard. However, I very much disagree with you on you statement, “And just because your pappy earned a bunch of money, you shouldn’t be THAT advantaged”.

    The government is NOT about setting levels of individual advantages. It is un-American to say that it is the duty of our democratic government to take wealth away from deceased rich persons and redistribute the funds to the masses through tax collection and disbursements. It sounds a lot like socialism or worst communism.

    To say that nobody should be “THAT advantage” also sounds a lot like socialism or worst communism.

    The government needs to make its money the old fashion way. They need to earn it. The money made by the rich was taxed at some level as prescribed by law. Passing down money already taxed to immediate family and having the government tax it yet gain is just plain wrong.

  13. Ray Hyde Avatar
    Ray Hyde

    10 million wouldn’t hurt me, but in those days the limit was only a million. In five more years that won’t buy you a townhouse.

    But what if you are the guy sitting at 9.9 and counting, are you supposed to die early so your children can inherit? It’s more than the small farmer, it’s the small machine shop, small printer, the family pizza chain, etc.

    Every time you set a cut-off you create a fairness discontinuity – like urban growth boundaries.

    Under the new rules they changed the basis. The new owner does not get the stepped up basis, so the inheritor could get hurt more if he ever sells.

    So many shell games get played that almost no one pays anyway, but burgess is right – somewhere along the line it got taxed already and the income on the money will get taxed again and again.

    I don’t mind paying my taxes so long as a) you don’t waste the money and b) you leave me alone with the rest. Unfortunately, what those two conditions consist of, exactly, is enough to keep us blogging for centuries.

    Speaking of taxes being a sleeper; In Clarke County taxes went up 10% and only one person showed up to spaek against it at the meeting.

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