Archive for the ‘taxes’ Category

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Assessor ignores assessment policy

April 23, 2009

Last week, the Tribune published Cook County Assessor James Houlihan’s fiscal reform proposal.  He wants to restructure the state sales tax and the state income tax, claiming that this would not only balance the state budget but also provide more funds to localities, theoretically allowing them to reduce real estate taxes.

But Mr. Assessor, how about the assessment and extension of real estate taxes.  You know, the stuff you do?  Can’t you improve that?  Maybe you could start by assessing vacant land properly?  And making sure that land value is fully included in all assessments?  That’s not going to discourage any economic activity.

Then maybe we could ask the solons of the Cook County Board to change the property classification system, assessing improvements at only 40% of the ratio applied to land value? They could do this under existing law. Maybe they could even exempt improvements entirely?  And, while we’re asking the Illinois General Assembly to reform things, why not eliminate the sales and income taxes, by resurrecting the state sales tax?

Regular readers of this blog, and Henry George School students, know why this is a good idea.  Evidently Assessor Houlihan doesn’t want us to even think about it.

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Earmarks

April 18, 2009

Wikipedia (right now) defines “earmark” as

a congressional provision that directs approved funds to be spent on specific projects or that directs specific exemptions from taxes or mandated fees.

On the face of it, I don’t see that as such a bad thing.  If my Congressbeing has determined that the national interest requires a particular expenditure, it seems reasonable that she might want to make sure that a budget or appropriation item really will be used for that purpose.

The problem, of course, has been that earmarks are obscure, and invariably are for local projects in which the Federal government has no legitimate role.  Now, the earmarks are being disclosed, at least by House members, and our friends at Taxpayers for Common Sense have compiled a list. Not of earmarks, but of URL’s where earmarks can be found.

I figured they might be bad, and they are.  “My” Congressbeing, for instance, has a list of mainly municipal and nonprofit projects, at least some of which are economically justified and therefore should be funded out of the savings or other benefits which they produce. There  are also a few government contractors being taken care of, and a couple of CTA projects.  Because the latter is something I know a little bit about, I can say that the descriptions are quite deceptive, greatly exaggerating the result (e.g. “extension of the Yellow Line”) which will be obtained by a relatively modest ($1 million) expenditure.

And that list is hardly the worst.

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Land Value vs. Land Rent

February 17, 2009

Altho Henry George’s proposal is “to abolish all taxation save that upon land values,” his objective really is to collect land rent for the community.  Of course land value is, ultimately, determined by anticipated land rent, but rent is more stable.

This is illustrated by a recent article in the Wall Street Journal (“Tax Break Divides Large, Small Builders,” Feb 11 ’09).   In an example cited as typical, Pulte Homes is reported to have sold, for $2 million, land they had “originally paid $28 million for.”  So if land value declined by over 92%, how much did land rent decline?

Probably quite a bit less than 92%, because the $28 million was based on Pulte’s guess as to what the future land rent would be.  The actual rent, the amount that someone would have paid to use the land at the time Pulte bought it,  was doubtless much less than their expectation of its future amount.

Some opponents of land value taxation cite cases of great declines in land prices to claim that LVT wouldn’t be a stable source of revenue.  But LVT moderates speculation, and land prices would be more stable if more of the land rent was collected for public use.

One illustration of this is that states where real estate tax is relatively high have experienced more stable prices for homes and lots.

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The Parasite Protection Act

February 11, 2009

That’s one of the names Josh Vincent suggests for New Mexico’s SB333, which would reduce real estate taxes on vacant land and make up the shortfall by raising taxes on homeowners and everyone else who actually owns (or rents) land with a structure on it. I imagine some land speculators find themselves in financial difficulty, but they still have enough to influence a few legislators, and I guess this is intended to bail them out. Perhaps they just want to get legally what owners of Cook County vacant land get in practice.

Maybe I don’t know how to search, but I can’t find anything about this bill anywhere on the Internet.

I guess we could name it the “Housing Prevention Act.”

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“Progressive” income tax discourages paid work

November 27, 2008

That’s no news, but this seems to be a paper that confirms it. Abstract says that the proportion of “potential” income realized as actual taxable income by high income households declined when tax rates increased, while that of low income households grew when their tax rates dropped.  That is, folks work more or less hard, depending on what proportion of their income they’ll get to keep.

This seems to be what the paper says, but it’s behind an ssrn screen so I can’t actually get a copy. Abstract from taxprofblog.

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Philadelphia needs land tax, too

November 22, 2008

Henry George Foundation’s Josh Vincent had a nice op-ed in Thursday’s Philadelphia Bulletin, noting that there is a good case for cutting taxes on work and investment, and a good case for increasing the budget to pay for needed services.  His point is that this doesn’t have to be an either/or choice.  By taxing land adequately, taxes can be cut and service maintained or improved. No great revelation to Georgists, but it’s good to see it in a major newspaper.

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Henry George pops up in all sorts of contexts…

November 9, 2008

Here’s a proposal to fund education in “developing” countries using the increased land value which results as the general level of education improves.  Nothing wrong with that, but why limit it to countries where governments are likely to be dishonest and the quality of assessment may be poor?  Why isn’t it equally applicable in, well, Canada, where these people seem to be, or Chicago, or anywhere else where funds for education are needed?