Posted on 09/02/2009 7:11:45 AM PDT by BuckeyeTexan
On Monday evening I had the double pleasure of attending my first Log Cabin Republicans meeting (and dispelling a world of biases!) and hearing Texas Gubernatorial candidate Debra Medina speak. One of the major topics that Mrs. Medina spoke on was her stance on personal property rights and gun rights, which drew a strong, supportive applause from the attendees.
However, after asking her a question on the topic, and further discussing with Jerrod Atkinson, a big Ron Paul and Debra Medina supporter, afterwards, I am still not convinced that her position is the right one. First of all, it is a straight-up Libertarian position which holds to the philosophical belief that property taxes equate property ownership to "leasing" property from the government, not truly owning property outright.
Now, I should state for the record that I am somewhat Libertarian-leaning and am mistaken for a Ron Paul Republican all the time. The distinction that I draw, however, lies in the role of the State governments. Basically, within their own borders and for their own purposes and without interference by other States, the States may do pretty much anything they want to. Libertarians, in my opinion, have a hard time distinguishing one level of government from another, preferring as little government as possible, resulting in a borderline-anarchy approach to the role of government.
I differ.
Medina's contention was that we need to do away with property taxes of all kinds in the State and institute a system of sales and consumption taxes instead. My problem with this, first, is the fact that you give up local control over evaluation, appraisal of property and the assessment of taxes and send these to Austin. So my first question was whether this wouldn't be less efficient than our current system?
Medina's first response was basically a restatement of her assertion that we have Constitutional rights to property ownership that are somehow done away with through a property tax system. So I asked again if giving up local control for statewide control wouldn't result in a less efficient system. I decided not to push it and ask a third time or delve into related areas with my questioning.
However, Mr. Atkinson, seated directly next to me at an adjacent table, was quick to leap to Medina's defense. Atkinson is an intelligent, articulate and well-educated individual, so I value his input, and speaking to him on the matter would be pretty much the same as speaking with Medina, so I now shift my conversation to the "number 5" Ron Paul Republican in the State!
Jerrod and I discussed issues such as the apportionment of revenues of certain cities between sales taxes, property taxes and other fees. For example, Mesquite, according to his numbers, only collects 20% of its revenues from sales taxes, where Plano collects around 33%. In this situation, the Plano's would hate a sales tax-only system because they would, in effect, be subsidizing the Mesquite's, who would love this system because they would be receiving more than was being spent within their borders.
Now, could this system be implemented by the State? Sure--heck, it's even on the Republican Party of Texas' Platform! The problem is that we have had property taxes for long enough that many cities have set themselves up for development in a certain way that is not conducive to such a program. For example, Addison and Farmers Branch have small populations but large industrial and commercial tax bases. Under the new system, the "rich" become poor because now they receive a percentage of sales taxes commensurate to their population, not property taxes from the office buildings and warehouses that have made them two of the best-funded cities in the State.
It behooves a city to have a large population with significant retail development. In other words, Frisco becomes the envy of the State! For they have plenty of undeveloped land that can be rezoned residential--even high density residential like multi-family!--and significant retail development to serve the same. Under a property tax system, the Hall Office Complex north of State Highway 121 and on the west side of the tollway doesn't benefit Frisco except to attract businesses who would inevitably spend lunch dollars at local restaurants.
I will discuss more detail surrounding this matter in a subsequent article. That should be enough detail to make some heads spin for now! I'll also wrap up my conversation with Mr. Atkinson later.
But suffice to say, I believe Ms. Medina's proposal to move to sales taxes is a bad proposal. And being my first time to actually hear her speak publicly, in-person, and given her adamant stance on the issue, I would have to say this was a strike one for me personally.
Freepmail me or ping me from the original thread to get on/off the 2010 Texas Governor's Race ping list.
FYI
It’s a pretty simple concept. Don’t pay your property taxes and see who ends up owning your property.
It’s a pretty simple concept. Don’t pay your property taxes and see who ends up owning your property.
I see no discussion. I see people who think that they have some right to a portion of what Texan's rightfully own. Just another commie acting like a conservative. Local pols need to cut cut cut, just like the Fedzilla needs to do.
I didn’t mean that there was good discussion in the article itself. I meant that it contained some good discussion points for us to toss around. I should have made that more clear.
Ms Medina has about three loyal followers who continually spam the comments sections of news stories, and forums with anything they can about her. So, let me say to those folks: IT’S A BIG OLE WASTE OF YOUR TIME!
Got it. Here's a question. By what right does ANY entity have to a portion of Texan's property (i.e. life)?
Fedzilla, lol
By her logic, any sales or consumption-based tax then deprives us of our constitutional right to engage in commerce.
In actuality, none. Texas has the highest property taxes in the nation. I pay approximately $6500 every year on my one acre with a homestead exemption. Cash out of pocket.
I can understand the need, I suppose, to fund the school district and a few other local needs, but they’re bleeding me every year.
I don’t want a state income tax, but I don’t want sky-high property taxes either. There has to be another solution.
Our combination of property-taxes and sales-taxes actually does a pretty good job of balancing the revenues and power between state and local government entities. Since the state constitution prohibits a state-level property tax, this provides local authorities (counties, cities, and school districts) with a vehicle for funding their budgets. Cities also have some latitude and control over a portion of their sales taxes. Keeping the sales tax as the primary source of state tax revenue helps keep the rate of growth of state government in check.
It sounds to me that Medina’s proposals would be a move in the wrong direction.
However, I have problems in that Georgists tend to think that there is no right to own land, and it can cause significant issues with agricultural land. But it does have benefits such as encourage the development of land, which would help to prevent slums.
I see a little bit of a difference between the two. I can't choose the amount of money I spend on property taxes every year. It's established for me. If I don't pay it, the state/bank can take my property from me.
I can choose to spend as much or as little as I want through sales tax or consumption tax. Once I pay those taxes, I'm done and I own those items. The state/bank can't come back and take them from me. (Loan defaults aside.)
Yes, I think the author raised some good points about that too. I’d like to see more from Medina on how a sales tax system would provide the same local control.
The solution is to destroy any and all un-constitutional programs and to recognize the freedom necessary for schools to compete in the private market place. Why is it that the government decides what is appropriate for children to learn? Sales taxes should provide plenty of money to run the government of Texas. If not, they're spending too much.
Actually it is not a good discussion at all. It is a one-sided biased defense of local governments who would lose clout.
Woe is fricking us now! We got to put those governments ahead of freedom!
What Mr. David Smith intentionally overlooks is that abolition of property taxes would spur businesses to relocate to Texas and for those already there to expand as the tax reform creates economic growth. This is completely left out of the discussion!
Instead he focuses on what would befall those poor local governments and especially those already plugged in and addicted to commercial real estate property taxes.
But nary a word as to how local businesses and property owners would react to abolishing a system of taxation that penalizes them for owning property.
You can choose what kind of property you invest in, and do things to impact the taxable value of that property. You can choose to buy property in a locality that has higher or lower property taxes. You can impact the property tax rates by getting involved in the local government.
See post #13. Do you believe that a local sales tax would provide the same balance and control?
I didn’t mean that there was good discussion in the article itself. I meant that it contained some good discussion points for us to toss around. I should have made that more clear.
Local sales taxes are sent to Austin along with the general sales taxes and then rebated back to the localities. The author had it exactly right.
The cities would collect their own sales taxes, right? Where am I missing anything? The cities that don’t want a Wal-Mart or a retail outlet will be the only ones losing out. They deserve to if they’re anti-business.
I just wonder if this means that schools and the county hospital and the local bus/tram authority gets to levy sales taxes too?
Will the new limit be 20% or 25%?
Certainly, but property taxes don’t afford me the same level of control over my cash and property that a sales/consumption tax would.
Sure, let the local governments impose up to 8% more sales tax and 2% for the county. Will we let the county hospital, schools, county college district, water board, regional transit authority impose new sales taxes too?
If a city is anti-business and regulates them away then they will lose out big time.
But they are sent back what they collect right?
Texas doesn’t take Irvings local sales tax and give some to Grand Prairie just because.
The actual statement he made, within its context and as opposed to your paraphrase of what he said, is simply an affirmation of the 10th Amendment as related to separation of powers between the states and the federal government. He was also pointing out that the anarchist wing of the libertarian population cannot seem to distinguish between federal, state, and local governments. In that regard, it is easy to reconcile his statement about the powers of state governments with his "libertarian-leaning" philosophy.
Same statement with one word changed is also true:
Certainly, but property taxes don’t afford me AUSTIN the same level of control over my cash and property that a sales/consumption tax would.
Under the libertarian philosophy there is little difference between government next door or in DC. That is true.
Texas doesn’t take Irvings local sales tax and give some to Grand Prairie just because.
Right now, that is the case. But if you were to eliminate property taxes and then retool the sales taxes to compensate the localities that currently have a higher property to sales tax ratio in their revenue formulae, then that would be necessity change. Not to mention that almost any such "reform" would include some form of state income tax as part of the solution.
Oklahoma doesn’t have property taxes. Works for them.
Let them raise their local sales tax if they want higher taxes. They should not be getting funds that belong to another city for any reason. Just because they had higher property tax rates doesn’t mean they should get other cities sales taxes.
and why would this have to include a state income tax? Let the state have a sales tax too. Wait they already do.
Why do I want to afford Austin control over my cash and property?
It will be whatever voters can bear, won’t it?
But keep in mind that all taxation on business is eventually reflected in retail pricing. And when we remove business taxes, we give back the choice to businesses to either lower their prices or expand their business or both. Lower prices and/or economic growth, what a choice!.
When the business tax base is replaced with a sales tax base, lower prices are brought back to current levels or business expands.
As for school districts, they can lobby for their piece of the pie. The pie is larger so there will be no problem maintaining or expanding their funding. As for school boards and administrations losing control of local taxes, just think of freedom shifting back to local businesses and property owners. Schools will have to partner with local businesses and property owners to get their piece of pie. I don’t see a problem here.
I am reminded of California’s Proposition 13 in the 1970s to rollback property taxes and drastically so. All manner of calamity was forecast by those supporting the status quo. Long story short, the taxes to fund big government were found within months in other venues and property owners felt immense relief. I rest my case.
Why would Austin have any control? They are just a cashflow conduit right? Collection is made amd apportioned according to population. Where does Austin decide apportionment matters? Do they have a separate secret state census?
Ping
right.
I think the best thing we can do is simply to reduce the size and cost of government.
EXACTLY MY POINT!
So would you prefer a system of taxation for your local community and school district that keeps the control over your taxes (and thus your cash and property) locally or one that transfers more of that control from the local community to Austin?
Using California as an example of good tax policy for Texans is not likely to win a lot of arguments.
And when taxes are transparent as in a single sales tax rate, voters will have something to hammer local politicians about at each election.
As it is now, .taxes are levied at so many levels and in so many venues, that the tax systems are in effect a ‘divide-and-conquer’ scheme to extract money and thereby freedom from those that are chosen to be losers.
The single rate tax is put up there for all to see. Any sales tax upward creep can be shot down by voters. When property tax rates creep up, it can be more difficult to get the voter base riled up.
You answered your own question. They already have a sales tax, so either it would have to be raised substantially or augmented by some other tax vehicle such as - a state income tax. And they could even let the local tax authorities who are losing their property tax revenue have their own little piece of the income tax.
VRWCmember: Same statement with one word changed is also true: Certainly, but property taxes don’t afford AUSTIN the same level of control over my cash and property that a sales/consumption tax would.
VRWCmember seems to assert that a sales/consumption tax would afford Austin greater control than property tax currently does.
Why would the state sales tax have to be raised substantially? The state doesn’t get property taxes, its not losing anything from the locals going to a sales tax.
I’m not sure that a sales/consumption tax system would necessarily give Austin more control. The state already has a sales tax. Allowing local governments to collect more sales tax instead of property tax provides greater control to Austin how?
Since property tax is entirely local taxing authorities - County, City, School - and not managed by Austin, VRWCmember holds it to be SELF-EVIDENT that replacing the current property tax system with sales/consumption tax system would afford Austin greater control than the property tax currently does.
We are talking the 1970s. California was a different beast then. And we are talking about how socialists in state government predict disaster when one of their favorite revenue makers is threatened.
Also Texas in the 1970s was looked down by Californians. And rightly so. Now it is different, much different. Texas is now more a leader and California is a disaster. Texas back in the 1970s was a corrupt democrat machine
Texas can lead the nation in tax reform or they can let the David Smiths hand their *sses back to them.
we have so many special taxing districts in Texas that it insane
You’re confusing me. I need more sleep.
If the state has no control over property taxes and they use the sales tax for revenue today, then how does wiping out property taxes require Austin to raise more revenue? Wouldn’t the increase in local sales taxes simply replace the revenue that localities take in today through property taxes?
All taxes are harmful, the question is which taxes cause the least harm. Most who understand free market economics tend to look at them in this manner:
1. Taxes on production = most potential for harm [income tax]
2. Taxes on property = less potential for harm than income tax, but see comments below
3. Taxes on consumption = least potential for harm, but could really alter behavior in purchases of luxury items
There is no perfect solution. However, I find property taxes to be especially anti-freedom because individuals cannot easily chose to avoid them in connection with life changes. For example, take an average, Houston family, who purchased a home in the West University area during the 1970s for, say 200 thousand. That home today is now worth, say, 500 thousand. If we take a tax rate of 1.5 percent, that family owes 7,500 in taxes each year, period. If the family income is not so high, or if it decreases for, say retirement, the family would be forced to sell the home. That’s what bothers me. A family in retirement [or facing a job loss, or whatever] can chose to consume less, not to purchase a new car, be more careful with finances, etc.; but they cannot chose to avoid the property tax except by selling it.
In addition, property taxes have a very large and continuous information problem: what is the value of the property? Finally, the tax puts a negative incentive on improving the value of property.
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