Sunday, February 12, 2006

Taxes: Part Three

In the previous two post I have tried to outline the problem as I see it and to explain why the limited view of addressing only the total tax levy (a problem which I freely acknowledge needs to be rectified) will not trickle down to the people who pay taxes every year as one might hope.

In this part I will propose a new view, one which I believe can address the issue by producing a fair tax distribution without the problems associated with relying on a local income tax as some suggest. So here goes:

This is NOT about preserving bloated budgets; it is not about good guys versus bad guys, businesses versus homeowners, assessors versus taxpayers.

It is about fair taxes, it is about changing the painful consequence of apportioning local taxes using a system that appeared long before the industrial revolution. In those ancient days property was valued according to the income it produced, not the real estate market.

In fact, newly uncovered tablets relating to local ad valorem taxes date back to 5000 B.C. yet we still pay for local government the very same way today!

R.I.G.H.T. (Rhode Island Gets Honorable Taxation) proposes a different distribution method. One that recognizes two types of property owners: (1) people who are existing owners and taxpayers and (2) those who are new owners, through buying or building.

Existing property owners would pay taxes by linking each individual's tax increase directly to the budget increase regardless of changes in their property's value. Everyone will share fairly in the changes in tax burdens. No longer will some owners receive huge tax increases while others receive huge decreases based solely on swings in the marketplace.

At the same time, the new owners in their first tax year, will pay a fair share of the tax burden using standard ad valorem taxes. It is nearly identical to the current system except the tax rates and assessments are always up to date instead of one, two or three years old. The following year, new owners become existing owners and pay their fair share of taxes in the same way that all existing owners are taxed.

Habits are hard to break. But unless and until we understand the structural flaws in an outdated ad valorem system of apportioning all local taxes on property values, no amount of budget cuts, by themselves, will get to the very heart of the problem we face year after year - the unfair distribution of local tax burdens.

Rep. John Loughlin II is one of the sponsors of the legislation that will make property taxes truly fair. Please contact him or contact us here at R.I.G.H.T. for more information. And please, contact your legislators and let them know how you feel.

I have created a presentation that takes about 20 minutes and explains this in much greater detail. I would be pleased to discuss giving the talk to interested parties.

The American Industrial Revolution started here, in Pawtucket, RI in 1793. It is only fitting that the property tax revolution starts in Rhode Island as well.

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