Friday, July 10, 2009

"Predatory" Taxation: Adjustable Rate Property Taxes

Do you know what the Maine Income Tax rate is? Do you know what the Maine Sales Tax rate is? Do you know what your Property Tax rate is?

You may not be able to answer any of the above, but my guess is that you may know one or both of the first two, and don't have a clue about the Property Tax rate.

The Property Tax is a particularly malodorous animal, and the fact that you probably don't know what the rate is hints at the reason.

State Income Tax and Sales Tax rates are set by State Law (statute), and remain fixed unless the law is changed, except when those conniving little hellions in Augusta build "indexing" into the law, like they have on the fuel tax. And it takes great political "courage" (and political capital) to face the music when changes to those rates are proposed, especially when such changes are deceptively packaged for an all too gullible public. (By the way, did you know the word "gullible" is not in the Dictionary?) Witness the recent hub-bub over "tax reform" (deception in itself) and the mounting people's veto campaign.

The Property Tax rate is not fixed or set in statute. The rate is free floating on an annual basis, and virtually escapes public notice and controversy. The rate this year has nothing to do with the rates in past years or the rates in coming years. The rate simply is what it is for now, and nothing is set in even the mushiest concrete.

When annual town budget time arrives, neither the School Department or Municipal Government begins by determining the revenue that will be available from the Property Tax rate and other sources, and then proceeding to make expenses match revenue. That would be the dog wagging the tail.

Instead, just the opposite happens; the tail wags the dog. Both entities decide how much they want to spend and borrow, and then proceed to set the Property Tax rate anew to match revenues to desired spending. There is no political capital on the line, no significant courage involved, no chance of a people's veto of the rate (at least not yet.)

Hence a completely unpredictable tax rate, and more to the point, an adjustable tax rate. Remember the inflamed rhetoric in past months about predatory lending practices with adjustable rate mortgages?

If adjustable rates are the demon, than one might say that the Property Tax is predatory taxation. We cannot predict what the tax rate will be 3 or 5 years from now, and no one in an official capacity would touch the subject with a 10 foot campaign sign. Especially in this economy, and more pointedly, in Brunswick, where "standby for heavy rolls" is the operative nautical command.

If everything worked the way Property Taxes work, you'd look at the family budget for next year, and throw in a new car and any other increases, expansions, and other "costs beyond your control" (property taxes, for example), and determine what income you'd need to be able to afford those things.

And then you'd go to your employers and tell them to modify your salary accordingly, or you'll have their business confiscated and sold off to pay you as you wish. That sounds fair, doesn't it? All you're asking for is to be paid based on your ability to spend, right?

Why not have a word with your employers next week to see how they react to you resetting your "adjustable" salary every year with the force of law. It should hearken a new "era" in labor relations.

1 comment:

  1. Two outstanding posts. I am going to recommend them to many friends for required reading. And also send them to my local councilors and legislators, if you don't mind.