Friday, April 15, 2005

Email blast: 412 -- Tax Day, April 15. Going from BAD to WORSE

Hi Neighbors and Fellow Friends of (small "d") democracy,

Income taxes are due today. Libertarians push for lower income taxes. We can lower taxes by being prudent with government spending.

My D-party opponent in the PA Senate race, special election, wants to eliminate property taxes, and that means an increase in income taxes. Almost all homeowners will pay more over their lifetimes under that situation.

Furthermore, his assessment cap is illegal and will be struck down in court. Let's hope this occurs quickly so the damage and uncertainty to the county is less troublesome.

Today's property tax mess comes from various corruptions. The property tax situation was NOT supervised by governmental officials as keenly as we would expect.

In the past, wage taxs hurt Pittsburgh and drove people away more than property taxes. The best tax solution is the land value tax. The land value tax saves money for home owners and creates an environment for economic prosperity.

Perhaps my opponent's disdain to property taxes explains why he voted to give away tax discounts to corporations to build strip malls on green-field developments. Those special tax breaks for corporations (called TIFs) help create sprawl and increase taxes to everyone else.

I'm pushing for four serious changes to the property tax crisis. I'm not satisfied.

#1) I would eliminate TIFs throughout Pennsylvania. Both of my opponents are for them and have voted for them in the past.

#2) I would begin ASSESSMENT BUFFERING. Maryland does assessment buffering. I need to be a STATE SENATOR to champion this policy so as to bring sanity into the process. The average voter does not care about municipality caps and municipal windfalls. Rather, assessment buffering allows for the typical voter to focus on their own
household. Assessment buffering gives stability through the years, without drastic changes, legally.

#3) I would rely more upon the LAND VALUE TAX. This policy does not penalize home owners for fixing up their homes. Our region's affordable housing legacy is ending, due to taxing matters and bad mistakes such as the building tax hike put in by Bob O'Connor. A renewal to the Land Value Tax can reverse the outward migration within our downtown office buildings.

#4) I would work to abolish the deed transfer tax. Pressures mount in Harrisburg to increase this tax, state-wide, from 1 to 3 percent. This is a 200% increase. The city made a similar increase last year. I raised objections to huge increases to the deed transfer tax -- not my opponents. The deed transfer tax puts a FREEZE on the marketplace and makes a penalty for moving.

I welcome questions about taxing policy during the campaign.

I hope you got you income taxes done without too many headaches.


Mark Rauterkus said...

This question came in an email. It comes in three parts:

Hazel wrote to me:
Mark, What about the notion of limiting the TIFs to blighted areas and financially impacted neighborhoods? I know that the County Council voted 12 - 2 to allow TIF for the Deer Crossing development--which, of course, was totally against what environmentalists and others had asked them to do. Do you think there's any way to make limiting TIFs law?

Mark Rauterkus to Hazel
I'm going to fight to outlaw the TIFs. I'm only one voice, or one vote in the Senate. I'd not get what I want. But, I'll try. Perhaps I
settle for what you have in mind. We need to steer that way. I wouldn't vote for a TIF. If all TIFs go away, then, the real developers will come. Even a limited number of developers make TIFs mess up the process.

Thanks for the note.

Hazel back to Mark:

Got it. I see your point and agree with you. Too bad so many of the elected officials in Western PA don't follow your lead. Take care, Hazel

Mark Rauterkus said...

An email to me from N.B. My reply follows.

You are somewhat refreshing and have potential as a candidate but you have some why to go.

Some issues I commend to your consideration:

Sources of taxes that rise or fall as a result of a decision on the part of the "taxee" should be much more tolerable to most people than those that occur through outside influences. A sales tax is part of the buying decision, as is a user fee or deed transfer tax. At least on things beyond food and fundamentals, sales tax is something one voluntarily chooses. Property taxes that increase because some guy from California overpaid for a Pittsburgh home and made the neighborhood market values all go up hit the long term residents too.

On the income or profit taxing side - the power to avoid or mitigate taxes lies with those who have discretionary money. Tax rules are complex and the "little guy" can't afford the expensive professional guidance that finds the legal loopholes - in most cases the little guy can't even manage the basics of the routine filings.

A big issue for cities such as Pittsburgh is that Non-profits are not what the term implies... most people think in terms of charitable activities (the nuns living in Spartan quarters caring for the poor and infirm). It would be enlightening to take a look inside the big medical/educational/religious
organizations that are clearly taking care of their own. Who among those in the highly compensated positions at UPMC or Highmark really cares if the source of their income (and lifestyle) is labeled profit or non-profit?

Under the screen of doing good, the asylum is run by, at the pleasure of, and for the benefit of the inmates. Meanwhile those organizations negotiate voluntary service fees rather than paying an appropriate share of the cost of government.

It is not an easy proposition but taxes make most sense if they are put in context with the use of money by government. I don't believe that all people truly agree that government has a justifiable need for funds - there are many "conservatives" who would like to starve the beast. Even if a majority of voters concedes roles for government they certainly don't agree on what roles or how much funding is appropriate.

If one could work through that dilemma then a significant majority would strongly support a balanced budget (i.e. revenue stream to equal expenses over the long run). Once you get to that point the decisions on funding sources is open for rational discussion and hopefully equitable compromise. Otherwise it becomes a game of avoiding offending sources of power and that includes financial and political power.

Mark Rauterkus said...

Agree. I see where you are going. Good poonts.

With the LAND VALUE TAX -- if that is done well, as it should be done -- there will be very little flow on the property tax. The land didn't change in its value because a guy overpaid for another property in the neighborhood. Or, it isn't a radical change.

Q: Is it not more of a choice to stay where you live too?

Because sales taxes are part of the buying decisions, putting more of a tax burden on the sale is going to drive more people to buy elsewhere -- say on vacations or say on the black market. That will hurt PA businesses.

I agree that tax rules are complex.

I agree that the little guy can't afford the expensive professional guidance.

Understood. Same too with the deed-transfer tax. There are some big shelters there for bigger guys and the little guy can't form a
corporation for his/her house.

A little guy can't get a TIF.

But, we can watch the land. We know where the land is. We can tax the
land. We should be taxing what is easy to find, see, and understand --
the land. We can measure it clearly, even from satalites.

Agree that Non-profits are a big issue. Few do care if the source of their income (and lifestyle) is labeled profit or non-profit -- but some do.

In our family, we care. We do give back. We do go out of our way to help with efforts elsewhere -- be it expertise or whatever. Some care about fighting the good fight and being paid for it as one should.

Few do however.

Right. The expansion of the nonprofits (UPMC & Childrens) onto more land was something I was fighting against. Mayor Murphy was on the other side -- as were all the others on council.

I think we should make a land-grab FREEZE to all the non-profits. If
they want to expand, they can go UPWARDS. Or, they can rent in
commercial spaces that are taxed.

For me, to starve the beast is too harsh. I do want it to slim down in
considerable ways.

I think that there is a role for GOVERNMENT. But, I think we have over stepped those roles far too frequently.

You wrote, "Otherwise it becomes a game of avoiding offending sources of power and that includes financial and political power."

I'm okay in offending. That is perhaps part of my downfall as a candidate.

- - -
What do you think of GROWING GREENER 2 and the vote to happen in PA to
ask if we should be able to float a new $650 MILLION BOND?


Mark Rauterkus said...

Art and I make an exchange below. Art's email comments while I'm BOLD.


While an improvement over the current property tax system, ASSESSMENT BUFFERING and a LAND VALUE TAX are still unconstitutional, as they
continue to eliminate private property.
The answer is to eliminate all taxes except consumption, and to impose a
sunset provision that requires a debate and a vote to renew each tax.

Best regards,

Art (last name zapped)

Thanks for the email.

I'm okay with this -- sorta. Tell me more. Waht is except consumption?
Do you mean sales taxes -- as I guess you do. Right?

You are in favor of various consumption taxes. Perhaps more for tires
to help pay for roads -- but put to a vote.

But, isn't land "consumed" or "rented" too? What if I hog more land
than I need? Could there not be a tax on the land to get me to
right-size the amount of land that I need -- and help the market flow
with different demands for land and such???

Then Art again:
Exactly. I would eliminate all taxes (income, property, etc.) that
diminish or discourage a persons ability to be productive. Taxes as
currently administered are designed to redistribute wealth from the most
productive to the least.
These are inherently unfair - and tremendously wasteful, as we can see
everyday with endless examples of pork-barrel spending, etc.

By consumption I mean sales taxes primarily - possibly an increase in
usage fees such as tolls for public entities.

These are fair to all, and they also have the advantage of eliminating
income taxes currently lost to the underground/criminal economy, tax
avoidance, etc. - and it would divest the government of the huge
bureaucracy involved with collecting taxes.

And as voting requires debate and at least some public awareness, if
each tax must be voted on every so many years then the ability of the
government to spend our money on things the government has no business being involved in is significantly diminished...and a free society is

Any type of property taxes, including land taxes, essentially eliminate private property. Stop paying those taxes and what happens - the government liens your property and may even confiscate it to sell-off. If all land that you "own" is "consumed" or "rented," as you say, from whom are you renting?
Also, who determines how much land you "need?" Who determines if you
are "hog"ing it? These premises assume the government (or the "people") own all land,
which to me is a premise of communism.

Why shouldn't the market and a free people determine who owns anything,
including land? As to the public good, for example, all of the land for our City parks was donated from privately-owned land....and there is no dearth of philanthropy now.