Posts Tagged ‘Taxes’
Looks like the city of Tucson’s 2% increase in utility taxes is causing hardships in other government entities. It has reported that the cost to Pima County is $600k plus. The article below shows the TUSD hit is $650k plus (directly from the same budget that teachers get paid from).
We haven’t found direct data on the cost to the UofA, Pima College, Federal Government and the State of Arizona facilities but you can imagine it’s not chump change.
Where does Pima County, TUSD the UofA and the State of Arizona get their revenues to pay for the increased utility taxes imposed by the City of Tucson?
From RobO’Dell at the Arizona Daily Star
The Tucson Unified School District will have to pay an extra $655,000 a year in higher water bills, garbage bills and with the 2 percent utility tax on electric bills and gas bills. Those increases do not include the 2 percent extra it will pay on all its landline phones and cell phones, which hasn’t yet been calculated.The added utility costs come at a time when school districts are struggling to balance their own budgets after the Legislature cut $133 million from K-12 school funding earlier this year, and the state budget for the next fiscal year, which has not been approved by the governor, would take another $220 million from public education statewide.Bonnie Betz, chief financial officer for Tucson Unified School District, said the extra costs to the district will affect district operations.“We’ve planned for the increases,” she said. “But every time we have an increase in utility cost we have to take it out of the organization somewhere.”Still, Betz sympathized with the position the city finds itself in. “It’s a bad time. We’re all having trouble,” she said.
Dear Editor, Your headlines seemed like a dream come true: “Lower tax, few cuts in county budget” [Arizona Daily Star 4-28-09], declaring a “drop in property taxes” for a “total budget … down $6 million…”
Not explained is that the $6 million dollar “reduction” is offset by an increase of almost $22 million in the total property tax levy amount, from $399 million in 2008-09 to $421 million in 2009-10. A more accurate headline could have read “County to collect over $15 Million more from the taxpayers!”
This is because increase assessed values counters any real reduction in taxes. This year’s current tax rate is based on $746 Million in increased primary property assessments for 2007 — figures derived before the recession hit. Our property is being over-valued and over-taxed. Last year, Supervisor Ann Day and I submitted an alternative budget to the Board majority. In our introduction we explained:
“[W]hile the Primary tax rate decreased from $4.072 to $3.602 between 2002 to 2007, the amount of revenue collected by the county increased by over $70 million dollars…”
Your newspaper had clarified this in an article [10/22/08] with the headline: “Though tax rate dips, we’re all paying more.” The article explained how, even with the drop in tax rates:” taxpayers are paying twice as much in property taxes as they did a decade ago.”
Equally ominous is the hidden long term and ever increasing debt. Our debt service has jumped this year by $10 million to a total of $110 million dollars, which currently makes up over 37% of our primary property taxes. And Pima County’s debt is going up with non-voter approved debt through “Certificate’s of Participation.” In fact, Pima County’s current outstanding principal debt is almost twice as large as all other Arizona counties debt combined ($757.6 million vs. $339.7 million). Next year the county wants a $500 million dollar bond sale next year for our Wastewater Department. Who do you think gets to pay these debts?
And speaking of other debt obligations, University Physicians at Kino Hospital is now asking for an extra $30 Million dollar subsidy, with up to $39 Million in each of the next five years (even though the original agreement assured decreased payments and self-sufficiency). But as the county reduces support for the cost of health screenings, the County Administration increases its budget by $2.7 million. While we increase fees for our children to play in county parks, this same budget increases Economic Development subsidies by an extra $14 million.
This raises the question of “sustainability” – a term used often with regards to the environment, but which should apply to our taxpaying citizens.
Because as we continue to bleed our taxpayers dry by continuing to raise taxes and fees on everything without a mandatory cap, the number of homeowner’s facing foreclosure remains at record levels in Pima County. We need to learn to live within our means rather than attempting to instill false impressions about “rate reductions.” But to do so, we need to have an honest accounting of our revenues and expenses.
There are three steps that could be taken immediately to help in the process:
1. We need the majority on the Board to stop refusing to appoint their representatives to the outside Citizen’s Budget Advisory Committee. Other people without a vested interest in the growth of government need to make an objective review of the Pima County budget. Since 1997, the Board has never allowed this committee to have a quorum.
2. There needs to be at least three public meetings on the budget, preferably at night – not just one meeting, scheduled for Tuesday morning, May 19th, when most working people can’t attend, in which all departments are superficially reviewed and a tentative budget is quickly adopted.
3. Finally, the county budget should be posted in both the Arizona Daily Star and the Tucson Citizen for the general public to be able to review. We paid TNI over $600,000 last year; we can afford to have their readers see our budget.
There are no legitimate reasons why Pima County government can’t be more transparent with the use of taxpayer funds. Perhaps, with a more informed public, deceitful declarations regarding property taxes will be subjected to a bit more scrutiny. One can only hope.
Pima County Supervisor
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From The Economist
The politics behind Britain’s tax changes are ugly. The economics are worse
JEAN-BAPTISTE COLBERT, Louis XIV’s finance minister, famously said that the art of taxation was like plucking a goose; the aim was to get the most feathers with the least hissing. But tax policy should aim to do more than smother protest: it should also seek to raise the most money with the least distortion to economic activity.
By this measure, Britain’s attempts to fill the fiscal gulf created by recession are a dismal failure and a lesson to cash-strapped governments everywhere. Take marginal income tax rates, announced in the British budget of April 22nd. Once national insurance is added in, effective marginal rates will climb from 31.5% to 41.5% through to 61.5% on those earning just over £100,000 ($147,000), thanks to the withdrawal of the personal tax allowance. After that, the rate will fall back to 41.5%, before rising again to 51.5% on incomes over £150,000.
Here’s my prediction – Rental tax -YES, the council will think they are taxing big bad landlords but in reality it’s renters that will pay. Trash Increase – NO Uhlich and Trasoff ran on eliminating the trash fee so don’t expect this political football to go anywhere in an election year. Bed Tax – YES, easy target because it only hits out of towners. It is kind of biting the hand that feeds you. The MTCV is collecting $9m as it is. Any discussion on how they are spending their funds? Bus Fare – YES, it needs to happen. We are way out of line with other communities. We don’t have the political leadership or will to make this tough decision so the RTA will take over Sun Tran and promptly raise fares. Utility Tax – who knows – No telling how this council will go on this one. It hits everyone so the impact on low to middle class families will be noticeable. The memo forgot to mention an Ad Tax – look for that one coming soon. Low Income Housing Trust Fund – watch this one closely. It’s a classic take from the rich and give to the poor. All it will do is increase the prices of housing and drive investors out of city limits. We’ll probably see increases in sign permit renewals, building permits etc. Development Services will need to recoup as much as they can. Water Fees - YES – we went up 8.9% last year, expect another 10% or so this year. Sewer Fees - YES. Anyone notice your TEP bills have a new tiered pricing structure. Higher users pay more – keep an eye on that on because it can be a big escalator. Wonder who this will hit the hardest? What you are witnessing is nickle and diming an entire class of people and business right out of a community.
We are starting to hear of lay offs finally today, with over 5600 employees at the City cutting 12 here or 30 there is a drop in the bucket. – fromt the Star – HERE.
City ponders new taxes, boost in fees to balance budget
February 23, 2009, 6:26 p.m.
Higher parks and recreation fees, higher bus fares, taxes on rental properties and gem show vendors buying temporary licenses are among the “revenue enhancements” Tucson officials have proposed in a report sent to the city manager Feb. 4.
The report, obtained by the Tucson Citizen through a public records request, examined ways the city can increase its tax and fee collections to cover its costs. It suggested that most fees be hitched to an index or cost-recovery formula to avoid financial handwringing whenever there is an economic downturn.
“Without intermittent fee increases, or a mechanism for incremental increases, the city will continue to find itself in situations during economic downturns when it is forced to cut entire services and programs,” the report states.
The report was written by the city’s Revenue Enhancement Team, which consists of staffers from the finance, transportation, legal and internal auditing departments.
The panel suggests returning to the city’s 1996 user-fee policy, which sets a percentage of the cost of a service that must be paid by the fee.
Seemingly small changes could mean significant revenue for the city, which is looking to save another $30 million next fiscal year (which starts July 1) to match expected revenues. Any new or reinstated taxes would likely take effect in July.
The City Council is scheduled to discuss City Manager Mike Hein’s proposals for closing the $30 million gap at its meeting Tuesday. They include $5 million in unspecified revenue enhancements.
The options on the table and the amounts they are expected to raise annually are:
•A 2 percent tax on residential rental real estate – $12 million.
• Raising residential trash and recycling fees by 4 percent – $986,000.
• A 25 percent increase in most bus fares – $1.8 million, with economy and express fares exempted. The basic fare would go from $1 to $1.25.
• Doubling the bed tax levied on hotels to $2 a night – $1.8 million.
• Utility tax increases on water, power and cable – $5 million
Officials also recommended that advertising, health spa memberships and tanning salons be taxed, that residential rental property owners be licensed and that builders be prevented from taking a cost-of-land deduction on their taxes.
City golf courses may also raise fees due to a $1.1 million bill they left the city’s general operating budget for the 2008 fiscal year, which ended June 30.
Twice in the past dozen years the City Council considered a proposal put together by a “revenue enhancement team.” Of the 10 suggestions made in 1997 and 2000, one was implemented: the much debated trash collection fee.
Thanks to Gila Courier for the original post.
February 11th, 2009
Intel Corporation has announced a major commitment to continuing their presence in Arizona. The company will be investing $3 billion to upgrade their Chandler facility.
Why the extra investment in the Arizona operation? In the words of Josh Walden, VP of the Technology and Manufacturing Group:
“What this does is allow us to maintain those high paying jobs into the future,” he said.
Walden credited state policies enacted prior to the launch of Fab 32, such as research and development and property tax credits, with bringing the investment to the state.
“We’d really like to see that continue to help other companies in Arizona,” he said.
A State, just like a City or County can take steps today that will change the course of their future for generations to come. Six years ago the legislators in Texas set the state on a new course of action. A number of factors made a difference, not the least of which were tort reform and a favorable tax environment. Texas is touted as one of the most pro-business climates in the US. Both Arizona and Texas have similarities like a strong university system, major quality of life and climate benefits and a diverse workforce. Texas isn’t saddled by our State Land Trust issues which as you look around Arizona is a big hurdle we have to figure out. With the right leadership in Arizona state government maybe, just maybe we can look back in a few years and see Arizona on top of some of these pro business lists.From Expansion Management
State Continues to Draw Projects
Texas remains at the forefront in attracting expansion and relocation projects primarily because of its pro-business attitude. Another factor is two dozen major universities providing research and development capabilities, as well as training partnerships.
When the high-tech industry took off in Austin, Texas’ capital city, Austin Community College developed a program to train high-tech workers so companies could find a skilled and educated work force, said Patrick Shaughnessy, communications manager for the Texas Department of Economic Development.
That’s why Oracle, the world’s largest provider of database software, recently selected Austin for its high-availability data center.
Oracle looked at all viable options within the United States and short-listed 15 facilities, including ones in Missouri, Colorado, Massachusetts and Arizona, said Oracle spokeswoman Letty Ledbetter.
Oracle’s strategic partnership with Dell Computer, headquartered in Austin, was another major factor in the decision.
Also taking advantage of Austin’s high-tech expertise is PerformanceRetail, which moved its headquarters from Houston in July.
“Austin has a solid record in creating some of the world’s largest and most successful technology companies,” said Gregg Burt, president and CEO of Performance Retail. “This move gives us ready access to the talent we need to continue our leadership position in the development of retail technologies and expand our efforts to better serve our growing client roster of global corporations.”
California’s Bay Area was considered, said Dean Cruse, vice president of marketing.
Location Makes a Difference
The state’s 1,248-mile border with Mexico translates into a large bilingual work force, a contributing factor in Clarke American Checks’ decision to open a second contact center in San Antonio in August.
The new $12 million facility will provide customer service and sales via telephone, e-mail and Web chat for its partners and their customers, which includes more than 4,000 banks, credit unions and other financial institutions nationwide.
With 350 people working at its first facility, Clarke American plans to add another 350 at the new 42,000 square foot facility.
Kaari Swope, Clarke American’svice president and general manager of customer service, said the company considered alternative sites in Kansas, Iowa, Utah and other locations in the Midwest.
“We chose to add a second facility in San Antonio because of the existing infrastructure, the high quality work force available and because of the advantages of being able to hire a bilingual work force,” Swope said.
The state’s other major metropolitan area, Dallas/Fort Worth, recently welcomed two new arrivals.
Safety-Kleen Corp., which helps more than 400,000 companies regulate hazardous and non-hazardous waste, will add 250 employees at its new 120,000 square foot corporate headquarters. In a memo to company employees, company CEO Ronald A. Rittenmeyer said Dallas’ central geographic location, its availability of affordable real estate, and a comparable cost of living were important factors.
Those were the same reasons Washington Mutual, one of the nation’s largest financial services companies, announced in May plans to open a national commercial loan servicing and operations center in the region, bringing 300 new jobs.
“We selected the Dallas area – and Coppell, specifically -because it offers quality real estate options, an abundance of highly skilled workers, and high quality-of-life measures, such as affordability, great schools and access to arts and culture,” said Stuart Miles, senior vice president for Washington Mutual.
Company spokesman Joe Arbona said the company considered Kansas City, Houston and Indianapolis, but felt Dallas offered the best pool of talent to fill the positions.
Dan Perkins is a freelance writer based in St. Louis, Mo.
Some highlights of how Texas ranks;
Texas: The Business Advantage
Texas has established a worldwide reputation for its open, positive attitude toward the business community. With a low tax burden, low living costs, a Texas-friendly lifestyle and government programs designed to help rather than hinder business, the Lone Star State is the perfect location to build your company.
- If Texas were its own country, its economy would rank 12th in the world, just below Brazil and Russia and higher than India, South Korea and Australia.
- The Tax Foundation ranks Texas 43rd among states for its combined 2007 state and local tax burden. That’s a contest in which first place is no prize!
- According to the Missouri Economic Research and Information Center, Texas had the third-lowest cost of living among all U.S. states in the fourth quarter of 2007, and by far the lowest cost of living among the 10 largest states.
- The Texas Enterprise Fund, created in 2003, gives Texas leaders unique leverage in using incentives to attract jobs and business to the state. The Texas Governor’s Office reports that the fund has brought 51,800 new jobs to the state and generated $15.6 billion in capital investments.
- Since 2005, Texas’ Emerging Technology Fund has been helping early-stage technology companies bring innovative products and services to market.
- Texas has made a substantial and ongoing commitment to upgrading the skills of its workers. The Texas Skills Development Fund, which provides state funding for employee training, awarded $25 million in grants in 2007 that generated nearly 7,100 new jobs and provided training to 13,758 workers in existing jobs.
- Texas emerged as the clear winner in Fortune magazine’s 2007 ranking of the nation’s 100 fastest-growing companies, with 32. California was a distant second, with 11 companies.
- In Chief Executive magazine’s annual nationwide poll of chief executive officers, Texas has been chosen as the best state in which to do business for four consecutive years (2005-2008).
The CNBC financial news network ranked Texas as America’s Top State for Business in 2008 and best all-around economy in the United States.
By Mella McEwen
Amid the economic turmoil roiling the country and spreading across the globe, the state of Texas is an island of economic calm, according to Texas House Speaker Tom Craddick….
The state also is an island “created six years ago when we consolidated agencies and cut spending and made the government work like every other business,”Craddick added. “We had people who made the hard decisions and did what needed to be done.”
The Midlander told his audience that “We have $12 billion in our rainy day fund and $5 billion to $6 billion surplus funds in our general revenue” as the Texas Legislature prepares to meet in January.“If you’ve been following what’s going on, California is facing a $19 billion budget deficit and has asked the federal government for a loan,” he said. “When I was elected speaker, we were facing a $5 billion deficit. When
I was sworn in, it was a $10 billion deficit. We didn’t ask the federal government for a loan, we formed a new appropriations committee and cut spending.” He cited as an example the Health and Human Services, where 13 agencies were combined into three, saving approximately $1.5 billion a year.
Tort reform passing at the same time also helped, he said, stressing that legislation was not passed just to benefit doctors, though it has attracted 11,000 new doctors to the state in the last four years.
“Everyone across the board has benefited from tort reform,” he said. “We got rid of most frivolous lawsuits” and companies looking to move to Texas have told him one reason is tort reform…
He predicted education funding will be a major focus of the session, telling the audience that “In my opinion, we’ve got to find another way to fund education and move away from property taxes.”
He also wants to update the school formula he said dates back to the 1960s and make sure good teachers are rewarded for their efforts.
Transportation will be another focus, Craddick said, noting that the Transportation Commission recently announced it cannot locate $1 billion in funds.“We’re sending in an audit committee and we will find that $1 billion,” he said. “You won’t recognize TxDOTwhen we get through. Here, about 1 percent of you are concerned about transportation. In Dallas, 99 percent are concerned about transportation. The gasoline tax is not raising enough to keep up with our infrastructure. We need to look at options on funding transportation.”
Health care will be another issue, he said, saying he wants to find ways to let small companies band together in larger groups so they can find healthcare insurance that offers better coverage at better rates.
Mella McEwen can be reached at firstname.lastname@example.org.
“Austin offered a lower cost of living, a great lifestyle, inexpensive services and access to a large, talented pool of technology professionals,” Cruse said.
Are you for “open space” laws forbidding building and also for “affordable housing”? Don’t be discouraged by the fact that severe building restrictions have sent housing prices sky-rocketing in community after community.
It may be impossible to have “open space” laws and “affordable housing” at the same time, but what are politicians there for, except to figure out ways to give us the impossible?
Palo Alto, California, where housing prices nearly quadrupled in one decade after severe building restrictions were imposed, also pioneered in laws mandating that each builder agree to sell a certain percentage of any new housing “below market.”
In other words, they combined “open space” laws with “affordable housing.” Who says the impossible cannot be achieved?
Of course this system can work only where just a fraction of the new housing is sold “below market.” Moreover, the market price of housing is raised so far above what it was by building restrictions that even “below market” prices for condominiums in Palo Alto can run to $300,000 or $400,000.
This is hardly “affordable housing” for people on modest incomes. Only 7 percent of Palo Alto’s police, for example, live in Palo Alto– probably older cops who bought their homes long ago.
But none of that matters politically. What matters is that people in Palo Alto can feel good about themselves, by being for both “open space” and “affordable housing.” Happy voters are what get politicians re-elected.
From Thomas Sowell of TownHall.com – Read the full post HERE.
Now the brilliant politicians that run our community demand open space, restrict infill developments in their back yards and still try to find ways to tax housing to set up an ‘affordable housing’ fund for those less fortunate. News flash, more people will need affordable housing based on policies that this community’s elected officials are enacting. What’s the definition of insanity again?
Arizona Daily Star
September 28, 2008
Many new homes in Tucson could come with a 1 percent transfer fee assessed on their sale under a proposal now being pushed by City Council members.
The idea faces strong opposition from real estate and development interests, who are being rocked by one of the worst housing markets in decades due to the mortgage industry collapse. They say the fee would take money from either the home buyer or seller, making housing less affordable.
The new fee, recommended for approval by a council subcommittee on Sept. 15, would apply to any house or condominium unit where a builder has entered into a development agreement with the city.
Money from the fee — equal to $2,000 on a $200,000 home — would go to the city’s housing trust fund, used to pay for such things as home repairs and down-payment assistance for low-income residents.
The fee for the first sale from the developer to the original buyer would be one-half percent, but it would increase to a full 1 percent for any subsequent sale in perpetuity. It would be enforced through a deed restriction attached to the home.
Development agreements are contracts between the city and a developer to do things they otherwise wouldn’t do, beyond a standard rezoning.
The agreements often are used to collaborate on parking, for pre-annexation agreements, or when the city sells public land, City Attorney Mike Rankin said. Developers and the city also make agreements to share the cost of building roads or other infrastructure.
The push for the 1 percent transfer fee by Councilwomen Regina Romero and Karin Uhlich already threatened to derail one development, a proposal to convert apartments to condominiums Downtown.
Romero and Uhlich voted on Sept. 15 in the Children, Families and Seniors Subcommittee to recommend that the full council consider the fee, which could happen as soon as late October. Councilman Rodney Glassman, the third member of the panel, was absent.
Although the idea still hadn’t been presented to the full council, on Sept. 16 Romero proposed attaching a transfer fee to a development agreement with Ross Rulney for his Flats at Julian Drew project, converting apartments into 53 condominiums in a 91-year-old Downtown building.
Romero said she wanted to talk about a “voluntary” 1 percent transfer fee, but Rulney balked, saying he didn’t want to saddle his potential residents with the fee. With Mayor Bob Walkup absent and the City Council split on what to do, the decision was put off for a week.
Romero subsequently agreed to drop the issue for Rulney’s project, which was approved unanimously by the council last week.
Since then, Uhlich and Romero have dialed back their push for the transfer fee, saying it is one item on a “menu” of options that should be considered to help fund affordable housing in Tucson.
Romero said the idea was proposed by the board of the affordable-housing trust fund after developer Jerry Dixon, of the Gadsden Co., agreed to the 1 percent transfer fee in a recent development agreement for a mixed-use development on the West Side.
“We think it’s a good idea for the council as a whole to hear about it,” Romero said.
Uhlich said she will withhold judgment on the transfer fee until it is considered by the whole council, but she said it merits consideration, especially if the city is giving concessions or incentives in the development agreement.
“It has enough validity to be considered,” Uhlich said. “I support giving it serious consideration as another tool for developers to address affordable housing with their projects.”
The transfer fee will face opposition from the Tucson Association of Realtors, said Colin Zimmerman, its director of public affairs.
“Now is not the time to stick another tax on a market that’s already shaky,” Zimmerman said.
That opinion was backed by Downtown resident Mike Sepich, a counselor who is interested in buying one of the Julian Drew block condos priced in the low to mid-$100,000s. “It’s pretty ironic to have a fee like that on the only affordable housing that’s proposed Downtown,” he said.
Zimmerman said the Realtors already support Proposition 100 on November’s ballot, which would ban a fee or tax on the sale of property by the state, counties, cities and towns.
He acknowledged that the proposition would not forbid Tucson’s new rules because the fee would be part of a deed restriction that city officials contend to be voluntary, although Zimmerman added that it’s not voluntary if you can’t get your project approved without it.
Rankin agreed that the state proposition would not prohibit the city’s transfer fee.
Corky Poster, a housing trust fund board member, said the housing fund needs a dedicated funding source to supplement the money it now gets from condo conversions and other smaller sources.
Since being created in 2006, the city’s housing trust fund has taken in $650,000 and has committed $385,000 for homeowner repairs, down-payment assistance and employer-assisted housing, said Community Services Director Emily Nottingham.
The idea behind the fee was to recapture some of the public money that helps get a project off the ground, Poster said.
“It recognizes the city contribution,” he said. “Developers think it’s a good idea because it doesn’t interfere with their first sale.”
However, Richard Studwell, a local developer who opposes the fee, said Tucson doesn’t have a track record of spending tax money wisely, given its much-criticized Rio Nuevo Downtown redevelopment effort.
“The fund … will have high administrative expenses, and it won’t accomplish anything,” Studwell said. “These are well-meaning people who can’t get it done.”
Anti-Business States Awash In Red Ink
Shortly after he was confirmed as governor of New York earlier this year, David Paterson told a group of business executives that when he received congratulations from old friends he hadn’t heard from in years, he was surprised how many no longer lived in New York. “All of them basically said the same thing,” Paterson told the group. “‘Good luck in New York state, but we can’t pay the taxes. The opportunities aren’t there.’”
After that experience, Paterson presumably can understand the complaints of corporate executives recently surveyed by Development Counsellors International, which advises companies on where to locate their facilities. More than four in ten of them have ranked New York as the worst state to do business in–second only to California in unfavorable mentions. The most common gripes included high taxes and anti-business regulations. Joining New York and California on the list of most unpopular states were New Jersey, Michigan and Massachusetts.
The DCI study, coming as it did amidst growing talk of state fiscal crises around the country, is particularly revealing. Of the approximately $48 billion in accumulated budget shortfalls that the 29 states with projected deficits are facing, $33 billion, or two-thirds of the gap, is concentrated in those five states considered by corporate executives to be the least friendly to business. Meanwhile, among the five states ranked as having the best business environment, Texas and North Carolina have no projected budget gaps, and Georgia, Tennessee and Florida are facing shortfalls amounting to about $4.1 billion, or less than one-tenth of the states’ total.
An idealist would assume that those stark numbers would jump out at legislators in the most anti-business states and prompt a bracing re-evaluation of their spending, tax and regulatory regimes, as Paterson advocates. But no such luck. Paterson’s former colleagues in the state legislature are lobbying for a new tax on millionaires, while across the country California’s legislators have called for boosting the state’s top tax rate from 9.3 percent to 11 percent. Since many firms, especially small ones, are organized corporately in such a way that they pay taxes on profits at their owners’ personal income tax rate, any increase in the top rate of income taxes will hit small firms hard, to say nothing of the impact on the personal taxes of executives at big firms.
I’ve often heard people around the country say that voters in places like California, New York and New Jersey (which instituted its own ‘millionaires’ tax on those earning $500,000 or more a year several years ago) get what they deserve. But beware. States that have taxed and spent themselves into a bind want everyone else to pay for their excesses. Even as Gov. Paterson excoriated his former colleagues in the state legislature for failing to recognize the magnitude of New York’s budget problems, last week he traveled to Washington, D.C., to urge the federal government to help bail out the state. Paterson argued creatively that the rest of the country should come to his aid because the Empire State is home to the country’s financial markets and thereby contributes disproportionately to the America economy–although I can imagine that there are many states that would gladly take those financial institutions off of New York’s hands if the governor considers them such a burden.
Paterson also contended that states like New York deserve aid because they send more in taxes to the federal government than they receive in return in spending. This is an old argument that one often hears from pols not only in New York, but in New Jersey, California and Massachusetts. Based on an annual ‘balance of payments’ study sponsored by former Sen. Daniel Patrick Moynihan from 1977 through 1999, the study found that certain states were always big losers. But even Moynihan realized that those states were mostly responsible for their own plight, because their federal legislators had led the way in constructing a tax system that not only redistributed income from the rich to others, but also redistributed income regionally.
For instance, a study of the 1993 Clinton tax increase, which included a sharp rise in top income tax rates, found that the legislation cost the residents of California and New York $60 billion in additional taxes in the first year, mostly because of all those rich Wall Street and Hollywood types who got hit harder. Residents of one New York congressional district alone, on the East Side of Manhattan, paid more in additional taxes than taxpayers in any other district in the country—an increase of $3.4 billion, or 700 percent, in one year. And yet the congresswoman representing that district, Carolyn Maloney, and the majority of California’s and New York’s congressional delegations, voted in favor of the tax increase, which had been heavily advocated by economic advisor to the president and New Yorker Robert Rubin.
By contrast, most of the New York congressional delegation voted against the 2003 Bush tax cuts that saved New Yorkers $36 billion in federal taxes in the first year alone, according to a study by the Manhattan Institute’s E.J. McMahon. The difference, of course, is that the tax cuts left money in the private economy, not in the coffers of government, where the likes of Maloney could get their hands on it.
As the fiscal problems of some states increase, we are likely to hear more about how the federal government must bail them out. It’s the failings of the federal government (that is, the Bush administration), that are responsible for state budget woes, so the argument goes. But any look at the states with the biggest deficits reminds us that governors and legislatures are largely the authors of their own problems, and that the biggest trouble some of them seem to have is that their taxing and chronic overspending have made them toxic to the business community. Don’t ask the feds to fix that.
Finally an article from the Az Star and Erica Meltzer detailing just how much our property taxes have increased in Pima County.
Despite repeated cuts in the tax rate, many Pima County taxpayers are paying twice as much in property taxes as they did a decade ago…To look at the long-term impact of rising home values on our taxes, the Arizona Daily Star used information from the Assessor’s Office to determine an average home value in 1998 and 2008. We found the average home value for tax purposes had increased 126 percent, from $89,444 to $202,483. Applying the tax rates in each of those years showed the average county tax bill increased 101 percent.Today’s average homeowner pays $476 more in taxes to the county than 10 years ago.Even when adjusted for 34 percent inflation over the decade, that’s still a 50 percent increase in constant dollars.
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