Property Tax (11-4-08)

Surprisingly, no one commented on the extraordinary number of properties at tax sale Nov. 3 & 4. There are so many that it not only takes 2 days, but was moved to the Township Auditorium.The Oct. 23 State had page 9 to page 22 full of listings, over 4000, the most I have seen. I am curious as to how many owner occupied houses are in this sale. Though a quick look at the list shows many properties with one owner, there are also quite a few single properties with a single owner.

Property tax is a cruel and punishing tax to citizens, especially those that own a home and face economic troubles. No matter what, that tax must be paid. There is no way out if the property is to be kept. Doesn't matter if you have income or not, sick or not, disabled or not, elderly or not, it must be paid. No income? No problem, you lose your house. No savings? No problem, you lose your house. With income tax, you pay as you make. With sales tax, you pay as you can afford. With property tax, you pay. You pay with money that has already been taxed before, something called income.

There are those that promote the 3 legged stool approach to property tax: sales tax, income tax, property tax. These proponents say that when one tax is down, at least there are the other 2 that make up. They will tell you that property tax is the most stable, allowing government economic stability regardless of the economy. Yet that is the problem, and the proponents just don't get it. When citizens are down economically, government should be down. But with property tax, it is not. It still takes in the same, or possibly more with reassessment or millage increase, truly punishing the citizens when they already have less to spend.

Property tax is an antiquated tax from 2 centuries ago. As there were no accurate ways to truly determine a persons income in the 1700 and 1800's, the most accurate method of wealth was real property: land and buildings. Now we can determine income so the need for property tax is unnecessary. We also have sales taxes, so why keep property tax? Maybe because it is still a "bail out" tax for politicians that are not good stewards of taxpayers' money. Or as supporters like to say, it is the most stable of the taxes.

Yes, stability, that is the problem. You can fund airlines, and lose millions. You can buy trolleys, and lose millions. You can buy river front property, and lose millions. You can redo a downtown 4 or more times in 20 years, and lose millions, along with the businesses that fold because of construction. You can fail to balance your books, fail to account for employee insurance costs, employee retirement costs, and so many other items, and lose millions. Yet, as a politician, you always have that ultra stable property tax to fall back on, a great bail out for all those mistakes you made. In other words, the word budgeting never needs be a part of your vocabulary. It is my belief that budgets should include allowances for depreciation and decay of physical facilities in a realistic and economically responsible way. If machinery is purchased for water purification, and it is known to last 50 years, then not only should money be marked for ongoing maintenance, but also for replacement in the amount of 2% per year. In other words, there is always a growing reserve fund locked in only for the intended purpose, nothing else. To rob a well allotted account is to force the budget into the red sooner or later, as the tendency of politicians is not just robbing one account, but all.

If politicians did not have a "stable" source of funding, they would be forced into effective and intelligent budgeting, or oversee their own bankruptcy. Even with this "stable" source, we are seeing cities that are in bankruptcy, so it is easily possible to spend past the stable, bail out tax, meaning any argument for the stabilizing effects of property tax is moot.

Politicians should be good stewards and excellent agents of budgeting. They should plan for the bad times with reserves that can carry through until good times. They need to face the same economic highs and lows that the people they represent do. To not to means not only a great punishment of the people by the politicians, but too easy a way for politicians to lose sight of responsibilities and elected obligations, creating a laziness and great potential for a political economic crisis, as we are seeing in our city and state now.

Contrary to the pundits, everyone pays property tax in some way, and it, not sales tax, is absolutely the most punishing tax of all.

Just ask someone on the tax sale list that lost their home.