Archive for June, 2008

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Taxpayers give a gift to U. S. Sugar, or some of its shareholders.

June 24, 2008

Associated Press reports that the state of Florida will give U. S. Sugar $1.75 billion to take 187,000 acres out of sugar production and give it to the State for Everglades restoration. An “environmentalist” is ecstatic:

“In the old days, you didn’t just beat your opponent, you also ate them,” he said. “Today, we’re eating U.S. Sugar.”

This works out to about $9,000 per acre, considerably more than the price of good rural midwest farmland. According to the article, it’s become increasingly difficult to make a profit in the sugar industry– leading one to imagine that a similar result might have been achieved had the State spent nothing.

The article states that the 1,700 employees will lose their jobs– but the companies web site says that it is an employee-owned company– with 1700 owners.  Looking at it that way, it’s about a million dollars per displaced worker.  Tho I doubt that each gets an equal share  of what amounts to a gift from the taxpayers. The San Diego Union Tribune says employees own only 30% of the company.  That source also says that the company’s 30,000 acres of orange groves are included in the deal.

And according to the New York Times, insiders have been squeezing the employee-owners out.  So there may be even more sleaze here than at first appears.

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Assessor Houlihan raises marginal income tax rates

June 21, 2008

I’ve commented before on the conclusion, by several analysts, that due to means-tested assistance many people of low an moderate income can face marginal tax rates approaching or even exceeding 100%. That is, if you accept a raise, you might lose some of your food stamps, or medical assistance, or subsidized housing, or federal and/or state earned income tax credits, or other benefits “targeted” for low-income people.

Last week Cook County Assessor James M. Houlihan was kind enough to tell me about another means-tested benefit, that apparently has put some people into a marginal tax bracket of 2,000% or more. And they didn’t even know it, because tho just announced, it’s based on 2006 income.

He calls it the “Long-time Occupant Homeowner Exemption,” and it only applies to “homeowners residing in their homes 10 years or more.”

  • If total household income for 2006 doesn’t exceed $75,000, the increase [in assessed valuation for the homeowner’s residence, apparently] will be limited to 7%.
  • If total household income for 2006 doesn’t exceed $100,000, the increase will be limited to 10%

In both cases there is no maximum exemption amount.

Somewhere there is a longtime homeowner, whose 2006 income was, say, $100,005. That extra $5 might now cost her hundreds (or thousands?) of dollars in real estate taxes.

The impossibility of intelligent tax planning is far from the only reason this is a dumb idea, of course. The savings these longtime homeowners receive will be made up by the rest of us– including the first-time recent buyer struggling to cover an adjusting mortgage.

But I don’t mean to blame Assessor Houlihan exclusively for this nonsense. He says, and I’m sure it’s true, that it is established by the Illinois Legislature. And furthermore, he seens toi be embarrassed enough by it that it’s not on his web site at http://www.cookcountyassessor.com (or at least I couldn’t find it there). There is some mention of it at the City of Berwyn site.

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Funding transit from TIF’s

June 8, 2008

A new paper(pdf) by Andrew Heidel proposes using TIF money to fund development of new stations along existing CTA rail lines. He identifies a number of potential sites, implements a simple method of ranking them based mainly on past TIF growth and ridership potential. Read the rest of this entry ?

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Brach’s site update

June 8, 2008

Back in January I noted a proposal to spend $141,000 of our tax (TIF) money per job “created,” to subsidize redevelopment of the old Brach’s candy factory site. Even more scandalous, the planned distribution center would have contained only 75 jobs on 30 acres within the densely-developed west side of Chicago.

Now comes a report that the City Council Finance Committee has delayed approval of the subsidy. Not because of the wasteful spending or small number of jobs created, but because some local people prefer that a school be built on the site.  I’m not familiar enough with the area’s land use or politics to know whether this is a good site for a school, but at least somebody seems to be paying attention to the fact that land is a limited resource, and perhaps giving land and money away for a small number of jobs is a bad idea.

btw, the more recent report places the parcel size at 12 acres, not 30, which seems small to me but perhaps the area involved is less than the entire site of the former Brach’s facility.

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Why Canberra’s land leasing failed

June 2, 2008

Australia’s capital, Canberra, was set up as a leased-land community, so that, as PM Edmund Barton said, “we shall be able to get the land on fair terms, lease it on fair terms and still make a profit for the Commonwealth.”  While economically land leasing can be similar to Henry George’s proposal to collect the land rent, serious mistakes were made.  In particular, lease rates were to be re-evaluated only every 20 years.  Thus, a lease could gain speculative value, and by the time revaluation was due a significant interest was opposed to it.

Details are in an article by Leo Foley, reprinted in the Australian Georgist journal Progress.