There Is Always Bad News For Revenue

It constantly amazes me that the state and local administrations continue to have a difficult time finding the money to fund the needed programs.  Yet there is a way and a way that could lead to a self-sufficient community, but stupidity comes into the equation.

Year after year after year, funds are not available and year after year the legislature tries to find ways to come up with the cash.  Most times it involves the bulk of the responsibility falls on the shoulders of the working class in Mississippi.

It is time for the state and local entities to find a better way to raise funds that are needed.  As the economy keeps getting worse, funds become smaller and smaller, the people of the state become less and less safe and secure.

The only way to keep the much needed cash rolling into the coffers is by finally accepting the need for Land Value Taxation.  (read page on LVT)  Why?  Easy answer…it fits all the requirements of a perfect tax.  These are:  1–the distribution of the burden would be equitable, 2–tax should minimize the effect on economic activity, 3–the structure should facilitate stabilization and economic growth, 4–should be simple and easily understood by the taxpayer.

If you want the governmental services for your community then a new system of taxation must be found.  It can be done and the people can make it happen.  But as long as they depend on the stale thinking of the past then their community will suffer and possibly wither and die.

It is your choice.

Time To Rethink Property Taxes

Mississippi is struggling with the reality that there is not enough cash to pay for the programs they have, much less any new programs.  The tax structure has been the problem….give aways to business and increases on others have made the whole system a joke at best.  It is time to rethink taxes, especially property taxes.

May I see a show of hands on the people that pay NO property tax thanks to Homestead Exemption?

I hate to be the one that pops a bubble here….but…you do realize that property taxes pays for such services as schools and funds many local programs, right?  Times are tough and getting tougher every year and every year the local politicians find ways to tax everybody.  Eventually reality will set in.

For too long Mississippi has given away revenue with the hope of attracting business and then asks the working majority to foot the bill.  There is a better way…and it would be a win-win scenario.

By making the Land Value Tax the rule, then the Coast and all of Mississippi could have the needed funds to use where it is needed, whether it is education or Medicaid or wherever.

Land rent means taxing land. Not buildings, not work, not commerce, just bare land. Or if land has buildings (as most land has) then the equivalent value of the land if it had no buildings.

Land gets its value its improvements (buildings etc) and from its location. The improvements were made by the hard work of the owners. But the location has value because of what society does, because of roads and schools and good neighbors.

If society taxes buildings and improvements, it steals people’s hard work, their time and energy, their life. Most taxation is therefore theft. But if society taxes the location, then it simply claims back the value it creates. Land rent distinguishes between the individual’s property and society’s property.

If you tax work, the amount of work goes down, because some work becomes less profitable. But if you tax land, the amount of land remains the same. So if you want to encourage work, you should tax land, not work.

Land rent is the only guarantee of fair property rights. If people can charge rent but they pay no rent themselves, eventually one person or one elite will own everything and nobody else can have any property unless it suits the elite. To see why, play the game Monopoly. Monopoly is based on “The Landlord’s Game,” invented by Lizzie Magie as a way to show why we need land rent.

Land rent is the most efficient way of creating wealth because it gives resources to those who can use them best (that is, those who can generate the most wealth from the land).

Land rent creates economic justice, by ensuring that everyone keeps the wealth they create, and any extra is given back to society. So nobody has unfair privileges, and everyone has an equal chance to succeed.

Land rent provides a fair system for all, because it generates wealth for society, yet it is so simple that corruption and inefficiency have nowhere to hide.  This is a definite plus, for today, those are the major problems with the taxation of land.

Even the Mississippi Economic Policy Center has called for the state to revamp its taxation system, then why not take the opportunity to truly revamp the tax policy?  Mississippi is always in need of funds, but its ruling few refuse to find a more equitable system.  The economic situation that Mississippi and the country finds themselves is a perfect time to find a more efficient tax system.

Taxation Proposal

In a local Coast community, Ocean Springs, MS has come up with a novel idea to get people to expand or innovate their businesses.

The proposed tax abatement will allow businesses to deduct up to 80 percent of their city property tax for a period of 10 years on any expansions or renovations.

It does not apply to businesses such as apartment complexes and condominiums.

Mayor Connie Moran said some business owners in Ocean Springs are unsure about expanding or renovating their businesses because of the higher tax bill they’ll receive.

By receiving a break on their city taxes, they can proceed with their improvement projects.

Another give away to business—where will the city make up for the revenue loss for this move?

Instead of looking for ways to increase the revenue and thusly able to fund city preojects without going in the hole, these people want to give away the revenue and worry about it later.  It is all just a stupid political game.

This could be avoided by one very simple move–Land Value Taxation–it is not a difficult thing to do…it will take will and ability…two things that most of the mayors on the Coast do not have.  They are elected by personality and likability, not capability

If more is needed about LVT then please click on my page here entitled, Land Value Taxation, and an explanation of the proposal will be there to check it out.

Open Letter To Gulfport

This is a copy of the letter I sent to the City Council of the city of Gulfport and will send it soon to the Board of Supervisors.

Open Letter To The City Council Of Gulfport, Mississippi

The city has been having its problems with the generation of much needed funds for programs that will benefit its citizens. There is a way to generate these funds and that course is called Land Value Tax. For years I have been advocating this form of taxation to no avail, but with the economic situation getting worse by the day, I believe this idea can save the city from massive cuts in services.

According to the Mississippi Economic Policy Center, any tax reform should conform to a 3 principle outline.  These are:  1—Be balanced and make work pay, 2—should create opportunity for economic growth and 3—be accountable to the taxpayer.  The Land Value Tax (LVT) addresses all three of the concerns put forth by the MEPC.

Land rent means taxing land. Not buildings, not work, not commerce, just bare land. Or if land has buildings (as most land has) then the equivalent value of the land if it had no buildings.

Land gets its value its improvements (buildings etc) and from its location. The improvements were made by the hard work of the owners. But the location has value because of what society does, because of roads and schools and good neighbors.

If society taxes buildings and improvements, it steals people’s hard work, their time and energy, their life. Most taxation is therefore theft. But if society taxes the location, then it simply claims back the value it creates. Land rent distinguishes between the individual’s property and society’s property.

Land rent creates fairness in the most basic of all issues: who controls the ground beneath our feet.

Land rent is the only rational tax, because it is based on a sound theory of property (you create it, you own it).

Land rent means an end to every other tax. So it becomes much cheaper to create additional jobs and manufacture goods. So wealth increases.

If you tax work, the amount of work goes down, because some work becomes less profitable. But if you tax land, the amount of land remains the same. So if you want to encourage work, you should tax land, not work.

Land rent is the only guarantee of fair property rights. If people can charge rent but they pay no rent themselves, eventually one person or one elite will own everything and nobody else can have any property unless it suits the elite. To see why, play the game Monopoly. Monopoly is based on “The Landlord’s Game,” invented by Lizzie Magie as a way to show why we need land rent.

Land rent is the most efficient way of creating wealth because it gives resources to those who can use them best (that is, those who can generate the most wealth from the land).

Land rent creates economic justice, by ensuring that everyone keeps the wealth they create, and any extra is given back to society. So nobody has unfair privileges, and everyone has an equal chance to succeed.

Land rent provides a fair system for all, because it generates wealth for society, yet it is so simple that corruption and inefficiency have nowhere to hide.

It is as simple as that….it would not take a massive bureaucracy to change the taxation of the city…

If further information is needed I may be contacted at:

Car Tag Price Hike

If you were expecting to see some analysis of yesterday’s inauguration then I suggest that the TV will be a better place to be.  They are dissecting every little piece of speech looking for something to use in their little 30 second sound bite.  Mississippi has major problems and that is my concern for they must be fixed if the state is to ever move into the 21st century.

Now on with the show.

A slump in automobile sales could lead to higher car-tag prices in Mississippi unless officials quickly find a way to head off the problem, a top lawmaker says.

The Associated Press obtained a copy of a memo the state Tax Commission sent this past week to Gov. Haley Barbour and lawmakers. The commission says money is running low in a state fund that, since the mid-1990s, has given drivers an annual discount when they buy or renew their car tags.

The price of car tags varies widely in Mississippi, depending on where people live and what kind of vehicles they drive. The tag for a new Lexus or Mercedes Benz could cost hundreds of dollars, while one for an old klunker is relatively cheap.

Officials say it’s impossible to pinpoint how much the price of an individual tag might increase because there are too many uncertainties now.

Lawmakers found a way in 1994 to ease the problem of expensive tags without gutting the county budgets that depend on the annual tax collections from tag renewals.

Figuring that buyers could add the cost of a higher sales tax to the financing for a vehicle, officials increased the sales tax rate for cars and trucks. They created a fund to hold a portion of the 5 percent vehicle sales tax. Money from the fund is diverted to the 82 counties to replace local taxes that are lost because of the tag-renewal discounts.

The result: The consumer pays higher taxes up front and gets some relief from the annual sticker shock of a tag renewal that can cost, in some cases, as much as a home mortgage payment.

In healthy economic times, the fund to provide the tag relief has remained in good shape. But during the plunge of the past few months, vehicle sales have dropped and so have tax collections.

With the passing of every day it becomes apparent that Mississippi needs a new way to generate funds, without screwing the people……there is an answer and it is as simple as “land value tax”.  It is simple to install and simple and easily collected.  Why not try a new approach?  Just what would be the harm?

Are There Any Realsitic Answers For Taxation?

Oh yeah…there is…but are they willing to do the right thing?

Taxes– Truth Not Spoken

During the last election the voter was bombarded endlessly with this tax scheme or that.  They were hit with accusations of higher taxes and the promise of lower taxes.  It became so confusing that I feel the people stopped listen and moved on to other promises and accusations.

I waited quietly for someone to explain to the people why this proposal would raise taxes or lower them…just saying so…does not make it so.  You people do realize that without taxes their would be very little income for the country, right?

So Irene let us take a look at taxes and what is meant by promises and accusations.

Payroll tax is a “fine” imposed on those who organize employment.

Income tax fines people who engage in production or render services.

Sales tax penalizes people for purchasing goods.

Customs tariffs fine people for buying goods produced in other countries. To do this is economic aggression, and invites reprisals which endanger peaceful relations and are a prelude to war.

Excise duties increase the cost of certain products, reduce demand for such, and worsen unemployment, as do all taxes.

A tax is a compulsory payment to a government unrelated to any direct penalty, voluntary service, or debt. Some payments to governments have the form of a tax, as compulsory payments, but not the substance, since the payment is for a service or rent for the use of property. When an oil company pays a lease for offshore oil fields, for example, this is a rental charge for property owned by the government on behalf of the people, so it is not a tax in substance. Likewise, the collection of land rent by a community may be tax in form as a compulsory payment once the land is obtained, but not in substance, since the ownership of land is voluntary and the payment is a rent for land if one agrees it is properly owned by the community.

Taxes can be imposed on two basic types of items: property and transactions. Transaction taxes includes those on sales, value-added, income, gifts, and inheritance. The effect of imposing such arbitrary costs on transactions is to skew the prices of the items taxed, distorting the price signals of a market economy. Sales taxes make goods more expensive, labor taxes make labor more expensive, and taxes on profits make entrepreneurship and enterprise more expensive by reducing profits. Such taxes have the same effect as an increase in the cost of production due to more expensive inputs. Depending on the responsiveness of supply and demand to changes in price, transaction taxes are partly borne by workers as lower real wages, partly by enterprises as lower total profits, and partly by consumers as higher prices and a lower quantity of goods purchased. Gift taxes punish the free transfer of goods; inheritance taxes punish the preservation of family heritage and the ability to pass on an enterprise to one’s children.

Taxes on income and on sales have a similar effect in reducing output, employment, and income. Taxes on wages, such as income taxes, impose a “tax wedge” on labor, making it expensive to employers while reducing the net wages of workers. This, especially combined with minimum wages, creates unemployment by making the lowest-quality labor too expensive to hire. Taxes on sales also reduce income, since the purpose of production is consumption, and if goods are taxed, purchasing power is reduced. A “value added” tax is imposed at each stage of production; for example, when trees are cut down, when lumber is cut, when furniture is made, and when it is sold, each state gets taxed according to the increase in value from one stage to the next. The result is higher prices, lower output, and lower employment.

Thanks to Henry George there is an answer to the taxation question and the problem.

A tax on land values is of all taxes that which best fulfills every requirement of a perfect tax. As land cannot be hidden or carried off, a tax on land values can be assessed with more certainty and can be collected with greater ease and less expense than any other tax, while it does not in the slightest degree check production or lessen its incentive. It is, in fact, a tax only in form, being in nature a rent — a taking for the use of the community of a value that arises not from individual exertion but from the growth of the community. For it is not anything that the individual owner or user does that gives value to land. The value that he creates is a value that attaches to improvements. This, being the result of individual exertion, properly belongs to the individual, and cannot be taxed without lessening the incentive to production. But the value that attaches to land itself is a value arising from the growth of the community and increasing with social growth. It, therefore, properly belongs to the community, and can be taken to the last penny without in the slightest degree lessening the incentive to production.

There you go, Irene…the Land Value Tax(LVT) could be the answer to a whole plethora of questions…at least it should be considered and not dismissed handily.

State Legislature To Tackle Taxes.

The sliding economy and their constantly adjusting of taxes is a norm for the state.
The Senate on Friday – in passing its first bill of 2009 — adopted legislation proposed by Brown to bar county supervisors from raising property taxes the year after land values get reappraised. It was unanimously approved by the Senate’s Republicans and Democrats.

Brown has complained that county supervisors are too quick to raise taxes after property gets revalued every four years. Requiring a year be lapsed before taxes are increased would give property owners time to question higher appraisals and ensure they’re correct, Brown said.

The bill also increases from $75,000 to $100,000 the homestead tax exemption for elderly and handicapped landholders.

Senate Bill 2300 now goes to the House, which has similar bills already filed by several Republicans and a couple of Democrats.

Increasing the homestead exemption for people over 65 or disabled is one of Bryant’s highest priorities for the 2009 legislative session.

“In troubled economic times, the greatest stimulus we can provide as elected officials is a tax cut, and I trust the House of Representatives will join us in helping thousands of Mississippians,” Bryant said.

There is an answer…it is as simple as the Land Value Tax…..why have this drama every year in the state legislature ?  The constant flutter of taxes….lower them…no wait…raise them….over and over again.  Why not find one simple plan that would eliminate the heartache and loss of hair trying to fund programs?

Keep Taxes Painless

This is an editorial from the Vicksburg writer, Charlie Mitchell.

New years should start on cheery notes.

Taxation, as a rule, is not a cheery topic.

But we have to think about taxes each January, so let’s do an overview.

There are lots of notorious tax grumblers. To hear them talk, roads and bridges, parks, police and fire departments, schools, courts, jails, the Army, Navy, Air Force and Marines — and every other government operation — should get magic money of some sort. The grumblers resent every penny taken out of the private economy.

Specific to federal income taxes paid by wage-earners, an argument the grumblers have put forth for decades is to do away with payroll deduction. The grumblers want people to sit down, write checks and mail them to their congressmen — for forwarding to the Internal Revenue Service — every week or two. The belief is that people would start paying more attention. And no doubt all of us would.

But while that’s all well and good, the chunk sliced off paychecks for personal income tax purposes these days is, for vast numbers of working people, merely a government-enforced savings plan. The latest figures show 40 percent of all working people do not make enough to owe any federal tax on their pay. The money is taken out, but workers get it back — and often far more than was withheld.

An entire industry has grown up around this situation. So many people will get complete refunds — and millions will also receive Earned Income Credit cash in addition to amounts withheld — that most Mississippi towns now have as many tax preparation franchises as they had video rental stores a few years back. Some of the operations are nigh-unto-criminal. They cater to folks who don’t have much money anyway and dangle “refund anticipation loans” in front of them.

Customers are enticed to sign over to the tax preparer their full refunds — which they could get in a matter of days anyway — for a few hundred dollars less than the full amount. It’s a major ripoff of vulnerable people, but don’t expect the Legislature or Congress to intercede. They avoid calling attention to anything having to do with taxes whenever possible.

And that leads to this: Some think that to avoid income taxes is tantamount to avoiding all taxes.

No, no, no.

Taxes are, quite literally, everywhere.

Buy a car and Mississippi imposes a 5 percent sales tax on the purchase price plus annual taxes and fees for tags. Lease a car and sales tax is added to every payment. Buy tires for the car or a battery and there are extra taxes and fees.

Put fuel in the tank and there are federal and state taxes. A Mississippian driving a 20 mile-per-gallon gasoline-powered car 200 miles per week in 2008 paid $200 in fuel taxes, probably without even knowing it. Diesel taxes are higher and, of course, there are those saying now is the time to increase fuel taxes.

At least 12 cents of every dollar a customer leaves at a state-licensed casino goes into state or local treasuries.

People who live in apartments or other rental units may think they avoid property taxes, but that’s not true. Landlords pay them and pass them through in rents.

Residential utility bills are exempt from Mississippi’s general sales tax but spend any amount of time looking at a cable or satellite TV bill, wired or cell phone bill or any other services and it’s amazing how many taxes and fees are tacked on.

The most unseen of unseen taxes are those well “upstream” of end purchasers. Think about a simple loaf of bread. In Mississippi, a 7 percent sales tax is added to the retail price — but ponder what goes into the retail price. Portions would be for taxes on the farmer’s land, fuel used by the trucking company, payroll levies on every worker in the growing, shipping, baking, wrapping, delivery and sales processes. And for imported products there’s the matter of import and export duties and fees.

See? Taxation really isn’t a cheery topic.

Beware of those who stump and fuss about the federal income tax as if that levy is the only or even the largest tax most people pay.

It’s not even close. There are dozens and dozens of methods through which our state and federal governments nibble away portions of the private economy to pay for public services. And it’s a fair prediction for 2009 that creative minds in Jackson and Washington will find even more.

Charlie Mitchell is executive editor of The Vicksburg Post. Write to him at Box 821668, Vicksburg, MS 39182. E-mail, cmitchell@vicksburgpost.com.

My take on this is….yes, it can be painless and it would only take the installing of the Land Value Tax (LVT).  It is as simple as that and yet it is ignored in favor of a tax code that would make a normal person have a stroke.  Why?  Your guess is as good as mine, but personally the complicated tax code favors the wealthy and corporate interests and not that of the people who actually pay the taxes.  Mississippi will have a chance to change its tax system…the state legislature has a proposal to set up a study committee on the existing tax system and find a way to replace it with a more efficient one.  Good luck with that.

State Programs Lose Funding

Gov. Haley Barbour says Medicaid or public schools – and possibly both – will be among the state programs losing money next week when he makes a second round of state budget cuts.

Within hours of the governor making the announcement Thursday, lawmakers started working on a bill designed to generate more money for state services by increasing the cigarette tax by 82 cents a pack.

Barbour cut about 2 percent from the $5 billion state budget in November, but he chose not to take money then from Medicaid, a government health insurance program for the needy. He also spared the Mississippi Adequate Education Program, a complex formula that provides most of the money for elementary and secondary schools.

The Republican governor said the second round of budget cuts is unavoidable because a weak economy is eroding state revenues. Tax collections in December were 9 1/2 percent short of expectations, and Barbour said economists believe the economy will continue to perform poorly for the rest of the fiscal year, which ends June 30.

Barbour told reporters he doesn’t yet know how many millions he’ll have to trim or how large the cuts will be to individual agencies. He said officials are awaiting information about corporate tax collections. Businesses affected by Hurricane Gustav in August were given until early this month to file taxes that normally would have been due in the fall.

Because Medicaid and public schools are the two biggest items in the state budget, Barbour said they’ll have to be trimmed. Under state law, a governor may not cut any agency’s budget by more than 5 percent until he cuts every agency’s budget by that much.

Gee, if the state would enact the Land Value Tax all this drama and threats could be eliminated.  Just a thought.  This subject will be covered soon…..the state is gonna have a study on the tax system and I will be offering the LVT at that time.

LVT, The Series–Part 2

I have been asked how will the LVT assist a community–it is best stated by the Center for the Study of Economics and The Henry George Foundation Of America:

Why Would a Community Implement Land Value Taxation?

•           A shift to LVT, even when structured in a revenue-neutral manner, usually results in net tax reductions for the vast majority of residents.

•           The problem of inaccurate or radically higher assessments is reduced because of the reduction in reliance on the building portion of the property tax.

•           The damage that taxes like sales and income taxes do to working families and local commerce can be lessened.

•           By reducing or eliminating the tax on improvements, there is a greater incentive to build, to build with higher quality materials, to maintain, to avoid blight, and to redevelop economically depressed areas.

•           Cities are almost always on the “short end of the stick” when economic development dollars are handed out.  This program helps achieve the same goals with no public investment.

•           When cities DO get permission to give out tax abatements, they lead to a revenue loss to the community with no assured payoff later.  LVT is purely revenue neutral to the city.  There is no tax shifting to citizens and property owners who have already done their bit.

•           A tax on land also has the advantage of being a “value capture tax.”  A new public works project may make adjacent land go up considerably in value, and thus, with a tax on land values, the tax on adjacent land goes up.  Thus, the new public improvements would be paid for by those most benefited by the new public improvements — i.e., those whose land value went up most.

•           A tax on land has been shown to result in better land use patterns and more in-fill development.  This has the benefit of reducing sprawl.

•           Several Nobel Prize winners in economics have stated their approval of government revenue being raised from taxes on land.

•           Support for LVT cuts across political lines.  Free-market economists like how it reduces distortions in economic decision-making.  Environmentalists like how it reduces sprawl and helps fund public transportation.  Developers appreciate how it makes new homes more affordable for their customers.  Citizens like the reduction in taxes.

This is a proposal that has come to call, especially now when the economy is tankinbg and communitiesd will soon be feeling the raising problem of sagging revenues.  Yes there is a plan to inject lots of cash into communities to head off the approaching economic storm.  But ask yourself, when those cash cows are gone where will the renvenue come from to continue the improvemnts to the community?

LVT will save communities from the revenue crisis that they are ALWAYS having.