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What is the Matter with Kansas – no Kansas Liberals- Round 2?

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This is the second in a series of blogs addressing the sharing of the burden of supporting the “poor”. In this posting I will opine about taxes. I call your attention to the earlier blog for my ground rules.

Now it is true that under this administration federal income tax has not been raised. It is also true that for many of us local and state taxes have been raised. Who raised them? Let us explore.

When Mr. Obama came into office along with almost total control of the Congress the annual appropriations were significantly increased (almost a trillion dollars). The argument was that the increase would have a simulative effect on our economy. Whether it accomplished the purpose is beyond the scope of this article,

A high proportion of the additions were reported to go to efforts to rebuild our infrastructure and to support local and state governments to continue to provide support -primarily to the poor. People were hired to accomplish the goal set. Now such federal spending is being reduced. That decision has forced local and state governments to either raise taxes to sustain the additional people and services or to make cuts to people and services enabled by the federal inflow of cash.

Douglas County chose to raise property taxes by about 20%. Now just exactly who got hit with that bill? Property taxes are reputed to be a proportional tax where the bill is related to the value of the property taxed. However, an examination of home ownership reveals that one finds few owners in the $0 to $50K income range with a substantial number in the $50K to $250K range. Clearly the majority of the bill fell on the latter. Yes, some amount of property tax flows through to renters but as I have written before only those traditional families renting a single family home might pay the full tax. Other renters pay from 50% to as little as 5% depending on the number of independent renters in a given property

Now exactly who made the decision to raise our county taxes? Our Democratic Party county leadership! The Democrats in Washington set the stage and the local property tax payer got fleeced – mostly those with incomes between $50K and $250K. Above that level of income it gets hard to generalize as the 1% have options that bury the cost of housing (to include the tax) in their business dealings.

So by public policy we have reduced the value of the retirement assets available to those making between $50K and $250K while through tax policy we have raised the costs of their real property assets (their home). What next. I was thinking we might look at regulatory initiatives. Soon. By the by is anybody going to take issue with the title?

Comments

prospector 2 years, 10 months ago

Maybe you should get out of the landlord business. Obviously you don't have the business prowess to operate at a profit you are happy with and whining about it really makes you sound petty. So your "No Money Down Real Estate" playbook is hokum and the downturn has effected your bottom line. Live with it, as the saying goes, death and taxes. Sell it all and cut your loses. If you have any equity buy GE and Texaco and go clip coupons. If you feel your property taxes are onerous on you, maybe you are in over your head and you should downsize.

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George Lippencott 2 years, 10 months ago

I knew that I was going to get shot at about taxes for the renters rather than any comments on tax increases for the rest of us. I own no property other than what I live in. So get off that high horse.

I was shot down only in the eyes of liberal renters who don’t want to admit that renters pay considerably less than owners (not landlords). The math is simple. The tax is about the same but rental properties have from two to many renters where as a single family home has one owner. The latter pays the full bill whereas the former pays half or less. No one has refuted that. jAFS as a single renter in a single family home does not and never did fit in my definition. He is also in a small minority among renters.

The issue is who is seeing the tax increase. My point remains that property owners (landlords are another matter) who live in their homes see a much larger increase than renters will. Essentially those with incomes between $50K and $250K take the brunt and those with lower incomes see much smaller if any increase. I note that we can expect another mil levy increase form the county again this year.

boltzmann 2 years, 10 months ago

Actually, the math doesn't work out as you are stating - just because math is claimed to be simple doesn't mean that it is correct. If two single people rent a house then each one of them is paying 50% of the rent as well as 50% of the taxes that are folded into the rent. Yes, they are paying each a factor of 2 less than one of them would pay if they lived in the house alone, but again they only have control of over 50% of the property, as opposed to 100% if they lived in the house alone. If the property taxes go up by 10%, then their theoretical amount of property taxes will go up by 10% as well.

The problem with you argument is that you are trying to treat this as a head tax and not a tax on property.

boltzmann 2 years, 10 months ago

Actually, the math doesn't work out as you are stating - just because math is claimed to be simple doesn't mean that it is correct. If two single people rent a house then each one of them is paying 50% of the rent as well as 50% of the taxes that are folded into the rent. Yes, they are paying each a factor of 2 less than one of them would pay if they lived in the house alone, but again they only have control of over 50% of the property, as opposed to 100% if they lived in the house alone. If the property taxes go up by 10%, then their theoretical amount of property taxes will go up by 10% as well.

The problem with you argument is that you are trying to treat this as a head tax and not a tax on property.

George Lippencott 2 years, 10 months ago

Actually my math is simple. You are the one making it complicated by introducing something else. For the two single renters or for the single homeowner they are paying the tax on the property. Because there are two single renters they pay half. My point.

Your point introduces the notion of value received. Obviously the homeowner has a number of opportunities not available to the renters as you pointed out. The owner also has responsibilities the renters do not have such as for maintenance and the like. How to parse that is not simple and I avoided it making the simple assumption that advantages are essentially equal to disadvantages. That is subjective and certainly open to debate.

For the renter the reality is that the landlord adds up the costs of maintaining the property adds some level of expected return and if the market allows he/she seeks that level in rent. If the market is tight they may get more. If the market is overstocked they might have to seek less and make short cuts like not maintaining the property – leaving the mess that results to the local taxpayers in venues like Lawrence where the landlords have unacceptable political clout.

Bottom line. Property owners in the $50K to $250K income level who own homes (majority) pay more in property tax (and increases) than those in the $0 to $25K range (renter or owner). Once again government policy (tax policy) makes that so. That was my only point.

And yes, the notion of some other form of tax to support local governments sounds attractive. In fact we have one in the form of sales taxes. The argument is that sales tax favors the wealthy because they do not spend proportionally on taxable items. To some extent that is true but how to quantify it is difficult. In Kansas if it doesn’t run away we tax it.

George Lippencott 2 years, 10 months ago

Of course. You do understand we can eliminate things and need less money??

lucky_guy 2 years, 10 months ago

I am not worried about the math, although fuzzy, I don't understand how the democrats are to blame. That makes no sense at all. The republican party runs the state, always has. The county has to raise property taxes to keep up with what the state legislature cut not because the stimulus. The dems had nothing to do with this. 1. How many people did DG CO hire because of the stimulus, the answer is not many. and 2. you need to be protesting Brownbacks plan to cut income taxes and raise property taxes for schools instead of trying to blame Obama for Keynsian stimulus that mostly worked, it just wasn't large enough.

Armstrong 2 years, 10 months ago

You have a very short or selective memory when it comes to R's always running the state

George Lippencott 2 years, 10 months ago

Good argument but we did not have to replace anything. That was the point. Refresh my memory, what did the state cut to the county that was not federal; to begin with?

George Lippencott 2 years, 10 months ago

By the by not everyone agrees with your final two points. I believe the generally accepted number of jobs created is about 3 million. We spent over a trillion. That works out to about $300K per job. I want one of those jobs – where do I apply.

I do oppose what the governator is doing. I am trying to influence people in our legislature. Are you – or are you just “bitching”!

Democrats run the county - they increased our property taxes by 20%. That was the point. The Republicans have not increased our taxes nor levied costly mandates upon us - whatever the nobility of the goal. We could have taxed the rich. We could have taxed everybody. We taxed the upper half of the middle class as we always seem to do..

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