MORE WORK FOR BARNIE

Barnie:

Here is some more work for your educational program.

The following are quotes from “Leesburg Budget Plan Holds Tax Rate Level” Lila de Tantillo the The Loudoun Extra of The Washington Post 24 March 2004, Page 1.

“Leesburg Town Manager John A. Wells proposed a $109 million budget Tuesday that would keep the property tax rate at 22 cents per $100 of assessed value. But rising assessments mean that homeowners will still face significantly higher tax bills.

“Property assessments rose an average 24 percent, from $353,000 to $437,000, raising the average tax bill by about $185, to $963, according to town budget officer Michael Freda.

“Loudoun County Administrator Kirby M. Bowers has proposed a $969 million operating budget that calls for cutting the property tax rate by 3.75 cents, to $1.07 per $100 of assessed value. But the 20 percent rise in home values countywide this year means Loudoun homeowners would still see their property tax bills increase by an average of $580.”

You can see why citizens are confused and why politicians like Kilgore and Kaine try to take advantage of it.

Perhaps we need an amendment to Sec 58. 1-3321 that states that it is state policy that if assessment raise the tax bill by more than 1%, municipal governments must lower the tax rate and then cannot raise it back up for 60 days following notice…

Otherwise municipal governments will continue to let the media cover thier avoidance of stated policy so they can ride up on higher assesments. As I noted in an earlier psot, just holding another hearing does not cut it. Your thoughts?

EMR


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  1. Barnie Day Avatar
    Barnie Day

    Neither Leesburg nor Loudoun County are avoiding the law. They’re following it explicitly. Read the last sentence in the Post story: ‘The budget vote is set for April 16.’ Nothing secretive going on here. The elected local governments are going to very publicly vote in public to raise these taxes. Couple of other points: town managers and country administrators don’t vote. They only ‘propose’, as they have both done here. They are not elected by the voters and are not directly responsible to them. They are simply hired hands and typically serve at the pleasure of the local boards. And one final point: There is a specified minimum time limit between the time of the public hearing and when the vote may take place. I don’t remember exactly what it is, but it is substantial–2-3 weeks or so as I recall. The point being the law prohibits a ‘rush to vote.’ Some time must pass. And it must be advertised, date, time, and place–even to the point of being published in a newspaper of general circulation two or three times. There are no secrets going on here. All the cards are on the table. The proposed budget in detail is available for inspection by any citizen, the date, time and place of the pending vote is advertised, and so on. Again, no conspiracy. Sorry. The law is explicit in Virginia. And local governments follow it explicitly. Are taxes addressed according to the letter of the law? Absolutely. Are they too high? Ahh, my friend. That is another question. But if you think so, vote’em out!

  2. Salt Lick Avatar
    Salt Lick

    “There are no secrets going on here. All the cards are on the table.”

    I knew this guy who was real good with cards. He could do the “Hindu shuffle drop off” right in front of your face and you’d never see the switch.

  3. Anonymous Avatar
    Anonymous

    Right on Barnie. As long as people don’t go to the meetings, they will get the government they deserve.

    However, the recent Loudon court case shows that what some people think is adequate notice can sometimes be only the barest hint of what is actually happening.

    At the same time apathy makes it possible for special interests to pack the meetings to get their point across.

    I think there should be a system like the grand jury system to provide an unbiased audience for public meetings. A certain number of citizens would be selected at random from the voter lists and invited to attend, for which they would be paid a small stipend. This would guarantee that at least somebody shows up, and provide a cross section of interests.

    On the other hand, it is easy to see why government administrators want to take advantage of what they see as growing affluence. The problem is that for many many people that affluence is only on paper.

    Maybe they should make the tax increases (dollar amount, not rate) only on paper. The county can then collect only when you sell.

    Ray Hyde
    Delaplane

  4. Barnie Day Avatar
    Barnie Day

    The fundamental problem–one nobody has the balls to address in a meaningful way–is this: our system of taxation does not fit our economy. We are using an early Twentieth Century tax model in a Twenty-First Century economy. We tax static, often non-earning entities–like real estate and personal property–when our taxes should be generated by earning segments of the economy. We are clearly in a service economy, and have been for a long time, yet we don’t tax services. This is idiotic. If I buy a lawnmower to mow my yard I must pay sales tax on it. I if buy the identical mower to mow your yard (to perform this service for you) I don’t! If I purchase scissors to cut my own hair, I pay the sales tax. If I purchase them to barber you, I don’t. This is stupid! We tax the recordation of real estate deeds, but not the legal service that prepares them! I promise you I could cite a thousand examples that make zero sense. ‘Tax reform’ is a phrase dragged through campaigns like a worn out whore, but nothing we’ve had proposed in a generation comes close to ‘reform’. True reform will match the system of taxation to the economy in such a manner that the earning sectors are throwing off the freight charges that it takes to carry them. Real estate appreciates, but does not ‘earn.’ The only way real estate ‘earns’ is transactional–when it is sold. If you want to understand why farmland is disappearing, this is it. It is this ‘transactional earning only’ aspect of it. Personal property is even worse. We tax a depreciating asset! And, goddamnit, the very worst tax we have, at least in the common sense department, is the merchants capital tax so many localities still use. With this beauty, merchants pay an inventory tax on what they don’t sell!
    Taken as a whole, it is as if we gone to the asylum, asked for their worst cases, and put them in charge of tax policy! Yet our candidates, Democrat and Republican, still rush headlong into this idiocy as hard as they can, screeching ‘Reform! Reform’ I’ll give you reform! But nothing could be further from the truth–nothing.

  5. Barnie Day Avatar
    Barnie Day

    The fundamental problem–one nobody has the balls to address in a meaningful way–is this: our system of taxation does not fit our economy. We are using an early Twentieth Century tax model in a Twenty-First Century economy. We tax static, often non-earning entities–like real estate and personal property–when our taxes should be generated by earning segments of the economy. We are clearly in a service economy, and have been for a long time, yet we don’t tax services. This is idiotic. If I buy a lawnmower to mow my yard I must pay sales tax on it. I if buy the identical mower to mow your yard (to perform this service for you) I don’t! If I purchase scissors to cut my own hair, I pay the sales tax. If I purchase them to barber you, I don’t. This is stupid! We tax the recordation of real estate deeds, but not the legal service that prepares them! I promise you I could cite a thousand examples that make zero sense. ‘Tax reform’ is a phrase dragged through campaigns like a worn out whore, but nothing we’ve had proposed in a generation comes close to ‘reform’. True reform will match the system of taxation to the economy in such a manner that the earning sectors are throwing off the freight charges that it takes to carry them. Real estate appreciates, but does not ‘earn.’ The only way real estate ‘earns’ is transactional–when it is sold. If you want to understand why farmland is disappearing, this is it. It is this ‘transactional earning only’ aspect of it. Personal property is even worse. We tax a depreciating asset! And, goddamnit, the very worst tax we have, at least in the common sense department, is the merchants capital tax so many localities still use. With this beauty, merchants pay an inventory tax on what they don’t sell!
    Taken as a whole, it is as if we gone to the asylum, asked for their worst cases, and put them in charge of tax policy! Yet our candidates, Democrat and Republican, still rush headlong into this idiocy as hard as they can, screeching ‘Reform! Reform’ I’ll give you reform! But nothing could be further from the truth–nothing.

  6. Jim Bacon Avatar
    Jim Bacon

    Barnie, You have reached the thresh-hold of wisdom! Yes, Virginia’s state/local tax structure is incredibly antiquated, based largely on revenue sources available to a 19th century, agrarian economy. I don’t think anyone would dispute that — not even the legislators who labored mightily over tax reform in the past session and birthed a monstrosity.

    Yes, we DO to reform the tax code. But there’s the rub. What KIND of reform? Do we reform the tax structure by making it more progressive — or more friendly to the kinds of high-income, high-performance artists, scientists and entrepreneurs who create wealth and jobs, and expand the tax base? Do we reform the tax code by structuring taxes to encourage socially desirable behaviors such as home ownership, philanthropy, working harder, etc.? Do we reform the system by seeking a more stable flow of revenue to dampen the ups and down of the business cycle and the inevitable budget crises that ensue? Or do we reform the system by encouraging more rational patterns of land use and development, which, in turn, is a requisite for holding down local government spending and addressing our transportation crisis?

    Ah, there are so many ways to go. No wonder we get only rhetoric in place of action!

  7. John K. Avatar

    I think Barnie’s on to something…. Since we’re on the topic, why tax income? Isn’t that, too, an example of a means of raising public revenue that’s outlived its efficacy? There are so many exceptions and tax shelters available that one’s “adjusted gross income” generally bears little resemblance to what one actually earns. Such a system also tends to produce high levels of non-compliance and outright fraud.

    Why not instead tax consumption (with certain carve outs for essential items like food and medicine)? We already see this with the state sales taxes and all those fine print line item charges on our monthly gas and electricity bills. In the absence of a state income tax, it would also sense to make greater utility of “use taxes” (e.g., road tolls, gas taxes, etc.). Wouldn’t government be better and more justly run under such a scenario?

  8. Jim Bacon Avatar
    Jim Bacon

    Taxing consumption through a Value Added Tax makes a lot of sense, as John K. suggests. Here’s the best argument I’ve heard against it: It’s so invisible that the taxpayer can’t tell how much he’s being taxed. He can’t distinguish between the cost of the product/service he’s buying and the tax. If the tax is invisible, the taxpayer is less likely to resist it. If you’re a liberal, there’s no problem. If you’re a conservative, and believe that taxes are an undesirable necessity that should be kept as low as possible, that’s very, very bad.

  9. Barnie Day Avatar
    Barnie Day

    It is two separate, even unrelated, propositions–where you get the money, and how you spend it. Holding the provion of government goods and services constant, the spending will be the same–whether it comes in the guise of sales tax, income tax, whatever. The thing that makes sense to me is a match to the economy. That’s got to be services. Static real estate is the worst thing to tax. Doesn’t earn anything until you sell it. It’s like life insurance–somebody’s got to die. The house in Loudoun or Fairfax that 25 years ago was valued at $40,000 is today valued at $500,000 and taxes have gone from $600 per year to $8000 (these are simply estimated examples). But you know how much cash this house is flowing into the economy? Exactly what it was 25 years ago. Not one penny. It is appreciating, sure, but here’s the thing: governments can’t spend appreciation, they can’t build roads and schools with it. All of that takes cash. So why not match our cash needs to that segment of the economy generating the most cash?

  10. Anonymous Avatar
    Anonymous

    Yeah, Barney! that is the most sense I have seen on this site.

    I used to favor mainly an income tax, but it has become so sheltered it is now meaningless.

    The value added tax is too invisible, and it is an accounting nightmare.

    The good part about the sales tax is that it captures income from the grey or underground economy. Illegal immigrants pay sales tax.

    The guy who has a coin operated business, like pool halls or video parlors pays sales tax, but not necessarily income tax. Hookers pay sales tax, even if their customers don’t.

    Probably some combination of income and sales is best, because it makes it harder to game the system. The difference between income and sales is savings (or debt) which also needs to be managed for best economic development.

    Kevin is right, too. If people didn’t feel so much as if the government was wasting their money, they wouldn’t mind quite so much paying the taxes.

    How we decide where to go is going to mean we need some agreed upon way to measure where we are.

    Something like: % publicly available open space/housing affordability + Per capita income/income disparity + education costs/college graduates + % economic expansion / (% (highway+transit) expansion * %increase in pollution) ought to do it.

    Such a formula would take into account requirements for balanced communities, economic expansion, transportation and education and environment.

    It would give us a single number that explains that every time we take somewhere we give somewhere else. We could use that number to club politicians to death.

    That does not mean that it is a zero sum game, however. There are probably multiple feasible solutions and local maximums on the plane of all solutions. It is also true that the next nearest maximum may not be reachable from where we are now without first absorbing some additional energy in the form of tax expenditures.

    The possibility of multiple feasible solutions is what makes any single position untenable over time. It is too simplistic to simply blame everything on dysfunctional human settlement, moral decay, race relations or any other single issue.

    The real question is, what is the best we can do, given where we are and what we have got to work with?

    That is a tremendously difficult problem to solve by itself: I can’t even solve it for the farm, where I am intimately familiar with the problems and the resouces.

    There is no guarantee that it will ever lead to the single most optimum solution, which may have existed only from a time frame we have already passed.

    Ray Hyde
    Delaplane

  11. John K. Avatar

    Jim, I agree with you that hidden taxes are a real obstacle to implementing tax reform. It’s inconvenient for government to let us to know exactly how much we’re being taxed. So, if indeed “sunlight is the best disinfectant,” let’s get the amount of taxes actually levied out of the fine print.

    Would that help “sell” a consumption tax to skeptics? I dunno, but along these lines, I’ve never understood why there hasn’t been a movement toward more fully disclosing the taxes and fees we all pay. For example, take gasoline. Granted, there usually is posted somewhere near the pump a sign that describes the taxes applicable on a per gallon basis. But, don’t you think a final receipt itemizing your charges would be more functional in terms of understanding what is actually being paid? Thus, rather than merely reflecting a total (e.g., $26.00), a receipt might itemize the charges like this: Gas – $13.00; Federal Taxes – $7.00; State Taxes – $6.00 (or whatever the charges may be).*

    Maybe there’s a sympathetic delegate or senator out there willing to offer a legislative solution to what consumers should already be expecting?

    *Driving around in a brand new SAAB 97X SUV? Priceless….

  12. E M Risse Avatar
    E M Risse

    Barnie:

    You keep missing the point: I did not say that Loudoun and Leesburg were breaking the law, I said they were avoiding the spirit of the law by just holding a hearing that no one knows is a requirement if they ride up on the assessment.

    Reread what the reporter wrote in the paragraphs quoted. What citizen would know that the spirit of the law is that riding up the assesments is not public policy in the Commonwealty?

    The ideas about tax reform are great but lets start with no letting pandering ploiticains use meaningless “reforms” to avoid the hard questions.

    EMR

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