The RIGHT tool for the job

Please forgive this paraphrase an old expression, “If the only tool you have is a screwdriver then everything will get . . .”. Well you get the idea.

Our property tax problem is a little bit like that. It appears that the only tool or remedy anyone ever proposes to fix the most hated tax in America is to control or cut tax levies. Prop. 13 in California, Prop. 2 1/2 in Masachusetts, the proposed TEL here in Rhode Island, are all such examples.

At first glance it seems like a reasonable approach. After all, the reason we have a property tax in the first place is to help fund the tax levy, that portion of the municipal budget not covered by other revenue sources such as state reimbursement from income and sales taxes, parking tickets, fees, such as dog licenses etc.

Since we all share in the services provided by our towns, we should share in the tax levy needed to provide them. Thus the efforts to lower those total expenses would appear to be a rational and fair way to reduce the tax burdens on property owners. And it would be, if we each paid our fair share every year.

We used to many years ago. We paid taxes based on the value of our property. Then someone noticed that properties were increasing in value and people were buying homes at ever increasing prices yet paying taxes based on the older values.

The solution? Revaluation. This way, the people who were paying those high prices would be taxed on the fair market value of the houses they were buying.

But, we revalued everyone. That meant that there were lots and lots of people who found themselves living in homes that were getting more and more valuable. Their taxes were climbing faster than their incomes, faster than inflation, faster even than budgets.

Folks were finding it hard to keep their homes. Indivdual tax bills were being driven, not by the needs of towns, but the real estate market.

After a typical revaluation about two thirds of the people get huge tax increases but the remaining third were getting tax decreases! Clearly not everyone was paying their fair share.

And those decreases were going to primarily commercial owners whose property values weren’t rising as fast as the homeowners, so owners like Home Depot and Wal-Mart were getting large windfall reductions on the order of 15-25% while owners of the most modestly priced homes were getting increases of from 11-13%. These numbers are for North Kingstown after its last revaluation but are pretty typical. Not exactly a fair distribution, is it?

Any marketplace, no matter how well regulated, is at its core, a gamble. There is simply no justification for using marketplace gambling as a basis upon which to tax our citizens for the municipal services we receive.

Our website offers a different approach, another tool, to use in this battle against the most hated tax in America, the Property Tax.

Take a look and share your thoughts.

Click on RIGHT for the website.

Sex and Taxes

Property taxes are all over the news again, or more correctly, still. Everyone is trying to bring relief to the beleaguered property owner, as well they should. Our collective property taxes in Rhode Island are way too high.

The goal of the lawmaker is to receive credit for lowering those taxes while permitting towns to continue providing needed services. The one who does that will be hailed as a real hero and is assured a prominent place in the Legislators' Hall of Fame. It's 'sexy'.

Sad to say that the real answer is a very unsexy, practical, boring one. We need to make the distribution of property taxes fair before we make them lower. Any tax increase, no matter how small, will be unfair as long as there will be those who pay increases based on the increased market value of their property, which often is anything but small.

The market price of property is not unlike prices in any market, the stock market for example. It is what buyers are willing to pay and is simply a gamble. True, we expect the dice not to be loaded and the market value (assessment) to be honest and accurate. But why should gambling have anything to do with the taxes we pay simply to live in our communities?

Nothing. Not one thing.

But maybe that's just me.

Recall. A Serious Matter

The democratic process includes election of individuals to office by a majority vote of the people. In the event that the people become dissatisfied with the performance of those they elect they can remove them at the next election.

But what happens if the people believe that the elected officers are simply unable to perform the duties for which they were elected and that waiting for the next election could cause irreparable damage to the public good?

Is there another option? Recall. An election held to remove someone from office. It is an awesome responsibility to overturn a vote of the people in a second election when it is possible that the majority might be a very small number, far less than the number of people of who voted for the candidate the first time.

The Charter Review Commission is considering a recall provision for the North Kingstown, RI Town Charter. They have presented two drafts of a proposal and have invited the public to speak their minds on the issue. It is an excellent process with everyone being given adequate time to speak and the commissioners listen. The next meeting is on Wednesday, June 7.

The proposal currently has three requirements.

1. How to get a petition started.
2. How many petition signatures will be required to place the question before the people in a referendum election.
3. How many people should have to vote in the referendum for it to be considered a valid election?

It is generally agreed that the bar needs to be set reasonably high to avoid frivolous petitions and expensive elections at the whim of a few discontented voters.

On the other hand it should not be so high that it is nearly impossible to mount a successful petition drive and achieve the desired result.

For the first requirement the commission proposes that 50 valid signatures from registered voters be obtained to be eligible to receive petition papers.

For the second requirement there needs to be a number of petition signatures equal to 20% of the number who voted in the most recent general election.

And third, for the measure to be successful there needs to be a simple majority and the total votes cast must be at least 40% of the qualified voters in the last general election.

I have come to the conclusion that the third provision should be eliminated thus rendering the referendum the same as for any election - a majority of the votes cast regardless of how many people vote. Since there is a danger that a relatively small number of people can overturn a prior election there must be built-in protections.

I believe the best protection is to make the second hurdle significant. In order to place a question on the ballot the petitioner(s) must gather a number of signatures equal to 25% of the votes cast in the prior non-presidential election.

The Charter Review Commission might modify the percentage to reflect their best opinions and the link to elections might be altered to include an average of several prior elections. There is no universally agreed upon best answer.

The next draft will reflect the collective wisdom of the commission.

We look forward to the people receiving the ability to rectify their mistake in a fair and democratic fashion. This is a good thing.

Our Dirty Little Secret

The 5.5% tax cap myth - our dirty little secret

False Advertising
Any advertising which is misleading in any material respect is considered to be false advertising.

In 1986, RI Gen. Law § 44-5-2 was passed apparently to limit local tax increases to 5.5%. This law clearly qualifies under the definition of false advertising. Let me explain how.

We assume that the 5.5% limit means that taxes won't go up more than 5.5%. But that 5.5% limit is very misleading.

You see, the 5.5% limit can be applied to either the tax levy, in which case there would indeed be a true limit of 5.5%, but it also can be applied to the tax rate, at the discretion of the town, and this is where deception comes in.

First, a short refresher in fractions, ugh! Sorry, but it will I'll try to make it painless, I promise.

First, remember that if the top number of a fraction increases the same as the bottom number, the value remains the same. For example, multiplying both top and bottom numbers by 2 gives the same fraction: 1/2 = 2/4 = 50/100 etc.

The decimal equivalent of any fraction is determined by dividing the top number by the bottom number and in this example is 50%.

A tax rate is a basically a fraction; the top number is the tax levy and the bottom number is the value of the taxable property. Converting this fraction to a decimal is done the same as any fraction; divide the top number by the bottom number.

We express tax rates as dollars per thousand instead of percentages so the conversion is modified slightly but the bottom line is that a tax rate of $25 per thousand is the exactly same as 2.5%. Both will produce the same tax bill on a $100,000 property, $2,500.

With me so far?

Now for the shenanigans. Just remember that a tax rate is a number derived from a fraction - Levy ÷ Value.

Let's say a revaluation increases a town's total value by 25%. (The bottom number in the fraction).

If the levy (the top number) also increases by 25%, the tax rate will remain unchanged! In any fraction, if both the top and bottom number increase by the same proportion, the result remains unchanged - remember our fractions lesson?

If this town chose to apply the 5.5% limit to the tax rate it would satisfy the law, since the increase in the tax rate, zero increase in our example, would clearly be below 5.5%. And yet taxpayers would be paying 25% more in total property taxes!.

Clearly the law is at least a deception if not an outright scam. It's a shameful loophole and should be plugged immediately.

Loophole
An ambiguity or unintended omission in a law, rule, regulation, or contract which allows a party to circumvent the intent of the text and avoid its obligations under certain circumstances.

The legislature owes it to us to fix this now.

We're Lousy Doctors.

There was an interesting article in the Providence Journal the other day. It was an account of a speech given by Dr. Ruth Simmons at the annual Urban League of Rhode Island luncheon. The topic was how and why we must fix failing schools. The 'why' is obvious. It's the 'how' that is that hard part.

All the usual suspects were addressed, high dropout rates, low incomes, the widening income gaps, segregation.

"My God, that was the reality I grew up in decades ago, and we're still talking about it again"

And we will be talking about it fifty years from now too because we treat these issues as causes when they are really symptoms.

When a doctor prescribes pain medication for pain without also trying to find the source of the pain, the doctor is guilty of malpractice. We see discouraged teachers, decaying buildings, inadequate tools and equipment, leaky toilets, broken windows and we ask for money to fix them. We're treating the symptoms not the causes, the equivalent of medical malpractice.

Try this experiment. Imagine a school where students are late to class, if they show up at all, where they swear at and threaten teachers, where they have their mp3 players turned on listening to their favorite rappers during class, where any student who wants to learn is ridiculed or worse, where there is no discipline or respect, where the halls are littered with trash.

Now plow millions of dollars into that school, give money to the families to equal middle class incomes, paint the halls, put computers on every desk, fix the toilets, hire the best teachers in the state and hire janitors to clean the halls.

Will those students magically want to learn? We just don't get it. Money is like a crutch we use to allow a broken leg to heal. But what if it doesn't heal? We just ask for more crutches!

It is a responsibility of government to make education available to all. No amount of money pumped into any school will make students want to learn. This can come only from family, and family must be required to assist when their children disrupt the classroom.

Parental accountability and responsibility are more important than anything. With it we will grow strong, without it we will never heal.

But maybe it's just me.

No More Little Guys

Question: When is the "Little Guy" not the Little Guy?
Answer: When there are millions of them.


I was somewhat bemused today when I read a letter in the paper about the dangers of Voter Initiative. The writer was particularly worried that that minorities would be hurt by discrimination by the majority and affirmative action would be overturned. Let's take these in order.

There is no doubt that workers (little guys) have been disabused by powerful business interests in the past, and even today in some cases. Unions wre formed to protect those without a voice and have done a good job at it. Unfortunately the 'little guy' is not so little any longer. They are a powerful force, and when it comes to municipal unions, even more powerful than 'management'.

And as their management counterparts used to do, they often have performed equally badly. Unions frequently have exchanged their mission to protect disadvantaged workers and instead try to extract as much as possible from the taxpayer for their members with too little regard for the very people whom they are employed to serve (while taking much of that money from their membership as dues to support their bureaucracy in the process) .

Legislators have caved in under unions' powerful influence; they represent a lot of votes. When taxpayers feel strapped and their representatives fail to help and protect them, they see Voter Initiative as one way to have their voices be heard.

There is always the possibility of tyranny of the majority over the minority in a pure democracy. Democracy means 'majority rule'. Our founding fathers knew this and addressed it so elegantly in the first ten Amendments to the Constitution, The Bill of Rights. Nevertheless, laws are interpreted and enforced by humans with all our faults. Slavery was legal until 1862 remember?


On the writer's last point, I fear we don't have affirmative action in this country. At least not in practice. As I understand it, affirmative action applies when candidates of equal qualifications apply for something, preference should be given to the minority. This would help minorities receive fair treatment and is the intention of the law.

Unfortunately, this is not what happens. In order to avoid affirmative action law suites, many organizations reduce the standard for minorities. In this way, they are sure to choose a sufficient number of minorities and thus avoid the risk of discrimination charges. The same happens often in college entrance requirements.

The goal of such laws is noble. We have treated minorities badly and we should demand that this un-American behavior stop. But unfortunately, the well intentioned law has in practice actually done more harm than good.

When standards are lowered, the candidates who are accepted, either for employment or school admission, are less likely to perform at the level of others who are hired under a higher standard. This lower performance only serves to further the myth that minorities are indeed inferior and fuels more discrimination and resentment.

Affirmative action laws have become de facto 'quota' laws and it is this that voters wisely reject.

Voter Initiative is not a panacea. Far from it. And both those for and against have legitimate concerns that should be respected and discussed, honestly and openly. We can only hope that our efforts to govern are the product of the very best we can do, working together, for everyone, equally.

As a great man once said, '... of the people, by the people, for the people..."

But maybe it's just me.

What is "Truth"?

The Providence Journal had a report on Wednesday, April 5, 2006, that property taxes on commercial property in Providence were among the highest in the nation.

The data comes from RIPEC, Rhode Island Public Expenditure Council, so we know the statement is accurate - the "truth".

But take a moment to peel away the surface. Property taxes are levied on the value of property. It is possible, even likely, that after a revaluation, properties do not change in value evenly - some go up a lot while others will increase in value just a little.

Under these conditions some property owners receive much greater increases than others, and some might even see their taxes go down after a revaluation. And this is even more likely with residential property.

Just as we Americans consume more food than any other nation, no one can deny the serious issue of hunger in our country. Distribution is a more critical part of the issue. We simply ignore this when it comes to local tax distribution.

In the same way, while the total tax revenue from commercial property is clearly too high, some property owners might actually be paying lower taxes and thus not paying their fair share, while others shoulder a disproportionate amount of the tax burden; in other words, the distribution is the more important problem.

If we make our tax decisions based only on the most aggrieved segment of the population and ignore the distribution of tax burdens, many will be hurt, needlessly.

There is much more to the property tax story than the simple "truth".

A visit to our website might help to explain this more and what we can do about it.

http://righttax.org

Life Is No 'Do Over'

I hate to be the one to tell you this but, unlike children's games, there are no 'do overs' in real life.

Our legislators are talking about easing our expungement laws. Simply put, expungement is a lie about the past. What happened happened. We can't make it un-happen with an eraser.

On the other hand we should do everything in our power to help a person to reclaim his or her life and to allow for a second chance.

The rights of individuals are protected by our Bill of Rights and other amendments to the U. S. Constitution

Amendment XV

Section 1. The right of citizens of the United States to vote shall not be denied or abridged by the United States or by any state on account of race, color, or previous condition of servitude.

Section 2. The Congress shall have power to enforce this article by appropriate legislation.

I'm no lawyer but perhaps imprisonment for a crime could be considered a " ... previous condition of servitude", in which case it would be a violation of our US Consitution to discriminate against persons who have paid for their crime (or are on probation for less serious crimes).

It would be a much better way to protect the rights of individuals if we added similar language to our own Rhode Island laws than to pretend that something did not happen when, in fact, it did.

We have enough laws, let's use them.

But, maybe it's just me

It's debatable

The Providence Journal recently ran "Voter initiative threatens R.I. elites" which was a response by Sen. Marc A. Cote to Rep. John Shanley's earlier column opposing voter initiative legislation. It was excellent and shed important light on a timely issue.

These two articles symbolize the best tradition of a democracy - debate. The Journal has performed a valuable service to the people by providing a forum for debate which allows people to consider both sides of an issue before making up their minds. What better way is there to insure the success of our democracy?

When ballot questions came up in Massachusetts, where I spent most of my life, I was especially gratified that the Secretary of State mailed a brochure to everyone in which each question was explained, along with two opinions, pro and con. The opinions were written by people chosen by each side to represent it's views.

This was extremely helpful to me, and I am certain, to most voters. I called the Secretary's office in Providence and asked that they do this in Rhode Island as well. I never received a response nor have they done so.

Here is what is currently required of a ballot question: 

1) Descriptive Heading. The descriptive heading shall be a brief caption of the question including the purpose of the question and the dollar amount, if applicable.  The heading should be limited to 12 words and a dollar amount, if applicable.

2) Authorization. The authorization shall be a line containing the cite to the authority for the question to appear on the ballot.

3) Text of the question.  The text of the question shall be the exact language of the referenda/question that shall appear on the ballot.

In my view there should also be a summary of the pro's and con's of each question to help the voter.

Respectful debate. Then let the people decide.

But maybe that's just me

Legal isn't good enough

When I talk to groups about changing the current ad valorem system of property tax distribution I am frequently challenged by those who feel that tradition has value and this tradition has withstood the test of time.

The system we use is specified in RIGL §44-5-1 "The tax is apportioned upon the assessed valuations as determined by the assessors of the town as of December 31 in each year at 12:00 A.M. midnight,"

Those assessments are driven by the marketplace, unlike the original intent of the law which developed long before the industrial revolution. In those early days, value was assessed on the basis of the income derived from property - we were an agricultural society after all. It was much closer to an income tax in those earliest days and it was quite fair. The wealthiest always paid the most.

Today, things are very different; the wealthiest can receive tax reductions, many average people get increases that force them sell their homes, yet after thousands of years, the law remains unchanged. The fact that it is legal simply isn't good enough.

It was once legal for white people to own black people
It was once legal for women and black people to be unable to vote.

We change unfair laws and this law is no exception. The American Industrial Revolution started in Pawtucket,
RI in 1793. It would be only right for the Property Tax Revolution to start here as well.

You can visit our website to see how at RIGHT

But maybe it's just me.