"Tax Exempt Property"

From the RIGHTTAX website

There are many worthy organizations and businesses that do good works; churches, hospitals, universities and colleges and charitable organizations, all provide humane and important services and are rewarded with tax exempt status.

In such cases the property owned by these organizations and used in the performance of their routine functions is not taxed. Most agree that it is only right to provide support for these worthy organizations and the other businesses and residents, through their property taxes, pay the share of the tax exempts which also receive those benefits of road maintenance, fire and police protection, maintenance of public spaces etc.

Communities obviously vary in population, infrastructure, size, and industrial density. Because of this, some communities are more attractive to tax exempt organizations. On July 21, 2008, Providence City Council President Peter Mancini, in a special section to the Providence Business News said "We’re almost at 50 percent tax-exempt real estate". This means that just 50% of the property owners are paying 100% of the tax levy - their portion plus the portion of the tax exempts.

This is clearly unfair to the property owners of Providence and other towns with the larger percentages of tax exempt property.

One approach would be to charge fees to various organizations but it produces ill will and resistance and some groups will always feel they have been unfairly and unreasonably taxed. There is a lot of push back to efforts to authorize new local taxes on private colleges, universities and hospitals.

And if the extra revenue is used to fill holes in the budget instead of being used to bring relief to beleaguered tax payers, they too will feel betrayed. This piecemeal approach fails to deal with the underlying problem of unfair distribution of tax burdens.

It is for this reason that the following plan is offered for consideration:

•     The General Assembly shall require municipalities to determine the percentage of the total assessed value represented by tax exempt property hereafter referred to as 'favored' property.
•     Favored properties shall pay a percentage of the standard property tax equal to the percentage determined as above.
•     For example, if the total value of favored property is 14% of the value of all property then the tax on 'favored' properties shall be 14% of the normal tax. 

Wouldn't it be better to have a known and transparent system rather than what we have now, individual mayors and town councils working out a variety of different arrangements of PILOTS (payments in lieu of taxes) that vary from town to town, inconsistent and unpredictable?

Taxes would be levied in a manner that is sensitive to the value tax exempt organizations bring to a community while not unfairly burdening others whose property is not tax exempt.

The actual numbers used shall be determined by careful analysis so as not to be unreasonable to any of the involved parties while standardizing the process for all. The General Assembly can also provide for different rates depending on the nature of the organizations. Some could even remain tax free.

I've been thinking about this for a while...

Do the most successful entrepreneurs become wealthy and create those jobs we all hear about, because of tax incentives or because they are who they are, their values?

If they were taxed more and earned just half their billions, would they have been less successful?

Would Bill Gates have created fewer jobs if he had paid higher taxes? If his taxes were doubled he'd be worth only $28B now, so did he do it for the money?

My question is, Are we too focused on the impact of taxes and not focused enough on the impact (or lack thereof) of role models and values?

I heard Arne Duncan, Secretary of Education, interviewed a couple of days ago and he spoke passionately and enthusiastically about the 'race to the top', the Bush tax cuts, the unions, taxes, but not once did he mention parents, discipline, cultural values, arguably the most important factors in whether or not we can educate our children.

That is not to say that taxes play no role in our success, of course they do.  But the future of this country will be determined less by money than the breakdown of values like integrity, honesty, honor, education etc.  All the boring stuff.

That Snooky, Snoop Dog, Rap, Crap, Lohan, Lady GaGa, Charlie Sheen and Donald Trump get so much public attention is far more indicative of our real troubles.

Maybe it's just me.

Is it a duck?

There's an old expression that says, "If it walks like a duck, quacks like a duck, it's probably a duck"

This is a story about Google and me.  I don't know if it's discrimination, a violation of fair trade practice or simply an error but I'll tell you what happened and let you decide.

I invented a marine product some years back and for the past 18 years have sold it exclusively on the internet. Being retired I was very wary of investing our retirement money in this venture so I have been trying to minimize expenses as much as possible and I run the business on a shoestring.  I'll never get rich from it but I enjoy doing it because my buyers really like the product.

About a year ago I tried a marketing strategy called Google AdWords.  For a fee, Google will display a website link when people enter relevant search words; the more you pay, the closer to the top your ad appears.

It didn't seem to make much of a difference so I closed the campaign, paid what I owed and that was the end of the story.

Recently I thought I'd try the campaign again so I re-activated my account. The campaign appeared for a day and then I got a notice that it was being suspended because of a violation to their policy.

I tried to find out just what that violation might be but couldn't.  I restarted the campaign and it was suspended again after a few hours, again with no explanation.

This happened three times, once even after I received a voucher inviting me to sign up for AdWords!

The person who answered the help line could not understand what was happening either and did some 'research' with me on the line.  He came back and said he had no further information and could not give me any more than I already knew.

Then, believe it or not, I got an email asking if I would fill out a satisfaction survey. I did.

Perhaps my name is linked to some terrorist group, maybe they don't like retired dentists, maybe they don't like boaters, maybe they think I'm really Rep. Henry Waxman (my name is Harvey Waxman). Who knows? They probably legally can refuse to accept a customer for any reason but aren't people entitled to at least know the reason?

In any case I smell something fishy and I can't get to the source of the smell. It seems only right that a company as huge as Google, which essentially is a monopoly on search engine technology and usage, should provide at least the courtesy of an explanation to the people whom they refuse to serve, even though they function nearly as a 'public utility' in their business practices. If they were the phone company I suppose I'd be using smoke signals.

In any case I wanted to share this with everyone about Google.

Is Deceit Legal in the General Assembly?

We all have heard about bills that are "held for further study". Is there any record of or minutes of committee hearings that can reveal just when that study took place, who participated in the meeting, results of any actions, votes, etc?

If, as I suspect, these bills are never discussed again does this mean that the committee essentially deceived, lied to the public as well as the bill's sponsor?

Is it a violation of any state statute to deliberately misrepresent the future actions of a committee by such committee simply not doing what it had publicly stated it would do?

I'm just asking.

Adoptee Compromise

I agree with the Providence Journal's editorial position, that adoptees have a legitimate interest in knowing their past health history, "Adoptees deserve to know", Aug 3, 2011.  I also believe that biological parents have a right to their privacy.

Why not modify the proposed bills (S0361 & H5453) to allow adoptees access to pertinent and important medical information only? Upon the request from a registered health professional, the biological parents would be requested to provide only the medical information relevant to and necessary for the welfare of the adoptee. They would be assured that their identity would be protected but also would have the right to refuse. This would preserve the anonymity of biological parents while providing important information to adoptees.

But maybe it's just me.

All Men Are Not Created Equal

With all due respect to Thomas Jefferson, all men are not created equal.

There are people who will become great athletes, artists, musicians, singers, poets, writers and mothers, teachers, plumbers, builders, etc. Others may never achieve more than the more menial jobs in our society.

Our task as a democratic nation, which prides itself on fairness and opportunity and often brags about its exceptionalism, is to be certain that everyone has an equal opportunity to reach his or her goals.

In fact, what makes this country great among nations, is that we believe, or at least are supposed to believe, that all, even the "less equal" among us, shall be treated with respect and dignity. 

I fear we are in danger of falling from that honorable position. When I hear folks holler  "We want our country back", I wonder from whom they want it back?

"Those Pesky Averages"

One and one are two.  Always have been, always will be.  We trust numbers and we make decisions, make choices, and cast votes based on them because numbers don’t lie.  We hear numbers from those trying to make points, to promote ideas and policies and to convince us.  But do we really understand them? 

While numbers don’t lie, they can be misunderstood, misinterpreted and even misused.  Arguably the most abused function is the "average".  While very useful to show overall trends, averages can be very misleading when it comes to the actual pieces that make up the data.

For example, let’s say that you're giving a talk at the local high school on, "Starting A Small Business".  Attendees were asked to give their ages on the signup sheet and when you learn that their average age is 46 you're very optimistic. 

At the lectern you look into the audience and see only very elderly people and lots of young children. Where is that 46 year old audience?  Well, half the audience are 85 year old men and each brought his seven year old grandchild with him.  The average age is indeed 46 but not the audience you had in mind.

An example closer to home is Rhode Island Law S-3050, property tax legislation passed by the General Assembly in 2006, which places a 4% limit on the annual increase in the property tax levy by 2013.

Like our speaker expecting lots of 46 year olds, we reasonably expect that our property tax bills will soon be limited to a 4% annual increase.  But like our speaker, we'd be dead wrong.

The reason is that we revalue property every three years. After any revaluation, while the average increase for all property owners will indeed be limited to 4%, individual property tax bill increases actually have NO limits. The 4% limit has effectively no meaning to individual property owners in a revaluation year.  Like our 46 year old audience, a 4% limit is not exactly what it seems. 

We believe that all property owners' tax bills should enjoy the same limits as the tax levies they pay for.

We can't help our speaker, but we can fix our property tax bills. Visit http://righttax.org to see how. 

   

Danger to Democracy?

The Providence Journal online posted a poll question about how we feel about Gov. Walker's effort to strip unions of collective bargaining rights.  I found myself conflicted. There is no doubt in my mind that negotiations with unions have resulted in unaffordable pension benefits which threaten communities all over the country. But is the solution to strip bargaining rights from unions?

The way I see it negotiations are similar to elections. Candidates argue for their side and we voters make our decisions in an election.  If the results turn out to be disappointing we have the opportunity to do better at the next election.

If Governor Walker were in charge, his answer would simply be to do away with elections. Bad results from union negotiations are the result of bad decisions by those whom we have elected to do the best for us all.  It is these people who must challenged and brought to task for their decisions, not negotiation itself.

Instead, I recommend that public union negotiations be made public - recorded and streamed for all to see. Governor Walker's solution is a threat to the democratic process.

A community or an investment club?

A good local tax system has two requirements -(1) to raise funds to be used for the common good and (2) tax in a manner that distributes the burden fairly.

The first goal is met better by the property tax than any other tax. Calculations based on property values always produce the needed tax revenue. Whether values rise or fall, the tax rate adjusts to meet the need.

The fair distribution of the burden however falls miserably short.

I asked an economist once if he thought it was fair to use property value to determine one’s fair share of the tax burden. He answered, ‘maybe not but it is easy’. The truth is that our present method is more like an investment club where those whose “investments” don’t do well one year are compensated for their “loss” by the ones whose investments did better. 

In a non-revaluation year property owners are taxed in direct proportion the the needs of their community - as levies rise, tax rates rise to provide the needed funds, and everyone is taxed proportionately. While it may be more than we'd like, it’s rational and it's fair.

But as values rise, new buyers were taxed on old, often lower assessments, and this is clearly unfair. 

The solution we use is a triennial revaluation.  New buyers will now pay a tax based on the market value of their property, which is fair, at least every third year. The effect of reassessments on the rest of the population however, is troubling. 

Rational increases that reflect tax levies are not possible with a revaluation. Instead, there are swings in tax increases and decreases that boggle the mind with some owners getting 50-100% increases!

One result of such onerous increases is a breakdown in morale and community spirit and people react in the only way available to them. They blame excess spending and they question the accuracy of their assessments, when in fact, the ancient method of reassessing everyone is much more to blame. 

We use a system of taxes that effectively takes money from some tax payers (the ones with increases greater than the levy) and transfers it to others whose values didn't rise as much. This transfer is of no benefit to the community, costs a lot to calculate, (revaluations are expensive), and most often, the transfer has been from the owners of lower valued property to those with higher valued property - not exactly fair or rational.

Let’s make up our minds - shall we tax using a system that treats our homes and properties as merely part of an investment club, or shall we all share the tax burden in a manner that’s good for the community fairly and reasonably?

It's about time Rhode Island adopts a Property Tax system to be proud of.  

To see how, please visit http://righttax.org

  

"An excuse to do nothing."

I received this letter from a Rhode Island Representative whom I contacted about an issue:

"I understand how hard you have worked on these ideas over the years. I really wish I could offer you some encouragement but the Assembly just isn't ready for it. Sorry to disappoint,"

This was my answer: 

For me the "Assembly" is people, individuals. Unless individuals are ready, of course the "Assembly" won't be ready. I'll keep trying, one at a time.

One of my least favorite phrases is "We as a society", as in "When we as a society demand action on.....something.....then something will get done". 

It's a cop out. Society is people. When people want to do something about litter for example, they'll pick up litter, individually, when they see it. Waiting for "society" means I don't have to do anything until everyone does it. And the results are everywhere around us. Just an excuse to do nothing.


So far I have had no response.

Maybe it's just me.