Tuesday, August 29, 2006

Economists: Dismal scientists, to say the least.

There is an article in the 8/28/06 Asbury Park Press, New Jersey's not alone in its property tax revolt. http://www.app.com/apps/pbcs.dll/article?AID=/20060828/NEWS/608280356 Towards the end of the article, it says: "Economists generally like the property tax because it is stable, visible..." "Stable", yes, for it is not subject to the vagaries of the economy. But does that necessarily mean that there is no other tax as good to use as the Property Tax? If so, we ought to get rid of the Income Tax and the Sales Tax and replace them with the Property Tax. State tax revenues will be much more stable.

Dumb idea? Of course. But most do not see the speciousness of the point with the "stable" characterization. The state seems to get by fine without tax revenue sources as stable as property taxes. The only reason the state runs into revenue shortfalls is due to overspending. And even with that, they manage to get by year after year. We have yet to see Trenton close down before the end of the year due to being short on tax revenue.

The economists continue with their specious logic when they say the Property Tax "doesn't allow behavior such as tax dodging common on the income tax." So, they would like us to think property taxes are loophole free. Are these guys wearing blinders or are they are just shills for those tax dodgers?

The fact is that the lowest 20% income earners among property taxpayers pay almost 3 times--THREE TIMES--the percentage of their income in property taxes as do those at the other end of the income scale. This is a builtin loophole to the advantage of the well-off, for which to get they do not need tax attorneys, friends in the legislature or an accountant. What ever happened to paying one's fair share?

Furthermore, how many average taxpayers own five or more acres which they can have classified as "farm land" in order to get a 90% break on its assessment? All one needs to do is to conduct $500 worth of business each year. Hmmm, do you think they might have a well-off friend who would gladly buy a $500 cord of wood or bales of hay or whatever each year in return for the same? How could I be so cynical? Maybe because one only need take a spin down Navesink River Road to see a few steer in the yard of the riverfront home of one of those who supposedly cannot get a tax dodge on property taxes. Think the bovine are there just for next summer's bar-b-que?

The complete obliviousness and insensitivity of economists to the heinous and insidious nature of the Property Tax is made even clearer when they say: "The property tax is a fantastic tax for things that are purely local because, under those circumstances, it does not function like a tax. It's more like a user fee."

A "fantastic" tax? Are they out of their minds? Fantastic if you are wealthy. Devastating if you are on low, fixed or no income. Maybe they ought to take a poll at the border of NJ as retirees and others join the exodus to friendlier environs. Ask them how "fantastic" property taxes have been to them.

And "user fee?" Well, I have always said you do not really own your home but are just a renter from the state. Now this is confirmed by the economists. We are just users of our homes, not owners. We must pay for the privilege of living in the state's house and on their land. I guess communism actually did win the cold war (maybe they did not know they need not fight one). Or maybe it is just a revival of the Middle Ages when we had land barons and peasants who paid tribute in order to live on their land.

The problem here is that these misguided views of economists are not exclusive to them. There are many who hold to the same who are also the ones who are major players in the current property tax reform effort. Too bad we are advised and ruled by the foolish or willfully blind.

Until the Property Tax is eliminated, its oppression of those at the bottom will continue. And the only response we can expect from those at the top will be their wonder at why the protestors aren't just eating their cake.

Wednesday, August 23, 2006

Appeal to get discussion on right basis

Following is an appeal I made to a Gannett reporter. I requested that the property tax discussion be given some balance as to its fundamental context. The idea is that individuals pay taxes regardless of who or how rich their neighbor is.

________________________________________

Read your article in today's Press about lawmakers wanting to cap spending in so-called rich districts.

Let me suggest that you and Gannett expose this misleading idea that there are "rich" and "poor" districts. The characterization would be true if there were only rich or only poor people living in those districts. The reality is there are an entire range of incomes represented in each. Individuals pay taxes by themselves. Their rich neighbor has nothing to do with that ability.

I live in Middletown where we receive state aid toward education in the upper teens as a percent of the total budget. Middletown has one of the better per pupil costs. Nothing near the Abbotts or other high-spending districts. We receive so little aid because we have a lot of wealthy residents. But I have yet to receive anything from them to help me pay my property taxes.

As you know, Middletown borders Keansburg, an Abbott district. I am not sure how much they receive from Trenton as a percent of their total education budget, but it certainly must exceed 60%. They are a "poor" district.

My suggestion for your reporting is that you could choose a street or block that acts as a border between the two towns. They will have similar sized and valued homes. The people who live in them will likely be in similar income brackets. BUT because one lives in Middletown and the other in Keansburg, they are each imputed with a different ability to shoulder the cost of local education spending. Obviously, they do not have differing abilities. But the state designates each district's ability to afford based on an average of the aggregate income, regardless of the range of incomes. Just because Keansburg does not have a Navesink River Road or a Locust (among other) areas, it has a lower average income, a lower "wealth" factor.

You can see how this is unfair and totally misses the point. If the aid from Trenton was credited directly to individual tax payers property tax obligation based on personal income then it might be fair. Of course, that would mean the property tax would then be a quasi income tax and/or ability to pay based tax. But this is not what exists. Just because one lives on the wrong side of the street, they are imputed with greater ability to pay than the guy they see out their front window. Ridiculous.

The above is why the context of the discussion about property taxes is so off-center. Fairness is the issue. No matter where one lives, they should be expected to contribute based on their own ability to pay, not an imputed ability simple because they have a rich neighbor.

I hope you can convince your editors that this is an important topic to be raised during this time of heightened attention to property taxes. Currently, it is being ignored as irrelevant or unimportant when it comes to the multitude of proposed solutions to the problem of high property taxes. It is forgotten that the burden of the Property Tax is individually borne and not supplemented for by one's rich neighbor. [Which raises the concomitant issue of the short shrift the disproportionate share lower income and fixed income taxpayers bear based on total income].

Monday, August 07, 2006

Corzine - Insincere or Insensitive and Oblivious

It should be obvious by now to anyone who heard Governor Corzine’s outline of his plan to fix the Property Tax crisis in New Jersey that there is no real hope for those most oppressed by this vicious tax. His speech was long on rhetoric and short on substantive reform.

His lack of sincerity—or political will—is confirmed by how he has no objection to the stacked committees with a four to two Democrat advantage, promising an outcome as productive as were the 2006 budget negotiations. Worse is key committee members who have a stake in the status quo. Does anyone really believe taxpayer interests will be served rather than vested interests?

The governor’s statement that most betrays his ostensible sincerity is that he’d like to limit future growth of the Property Tax to 4%. First off, that would be an increase over the current limit placed on the lion’s share of the property tax bill, education spending. Worse is the fact that it is a tacit admission that there will be no permanent reductions in the Property Tax, just a slower rate of growth. Thanks, Governor.

Nevertheless, regardless of whether the governor and the special committees are serious, they along with all politicians fail to demonstrate they understand the true nature of the problem with the Property Tax. It is simple. It is inherently unfair. It is skewed towards forcing those at the bottom to carry an unequal—higher—share of the total tax burden. Basic math confirms that built-in result will continue even if the tax is lowered. Are we interested in a just system of taxation or not?

We may need to find interim ways of giving relief to those presently being driven out of home and state due to the Property Tax. But the only real and lasting solution is to eliminate it completely. Anything short of that will only be a bandaid.

To answer those critics who point out we cannot—read as, lack the will to—reallocate a tax burden as large as that, there are two replies. First, it could be phased out over a five or ten year period, mitigating the impact of a single, massive shift of the tax burden.

Second, to say we cannot do it is to actually say we will not do it. And to say that is to imply that we do not care about those most adversely affected by the Property Tax. That means we are not interested in a fair system of taxation, and that we have little or no concern for those at the bottom when it requires boldness and sacrifice by those at the top. A sad commentary on the principles our state lives by: Love thy neighbor as long as long as I am not put out.

Until politicians, public interest groups and the taxpayer are willing to acknowledge the Property Tax is a tax which must be eliminated, low, no, and middle income taxpayers are doomed to more of what they suffer under today. It is that simple.