Wednesday, June 18, 2008

Tax Cap or Tax Crap?

We hold Governor Paterson in good regard, and give him credit for helping to bring the concept of a property tax cap into the arena of serious consideration, by endorsing the proposal of the State Commission on Property Tax Relief.  In the most reactionary and backward state in the country, where any proposed change to the policy status quo is efficiently strangled in the crib, that alone is a step forward.

However, we're less enthusiastic about the substance of the tax cap proposal that the Governor has adopted.   No more than four percent per year?   With an exception if voters in our third world-style school budget elections make it higher?   For most of us that's the equivalent of no cap at all.   Next, maybe someone will propose a law against domestic violence that says you can only beat your wife 26 weekends of the year instead of 52, with exceptions if you're drunk.

A 4% per year limit isn't a property tax cap.   It's property tax crap.

Want to see a real tax cap?   Here's one:

Section 1. (a) "The maximum amount of any ... tax on real property shall not exceed One percent (1%) of the full cash value of such property."

The legislation then:

• establishes a benchmark year for determining assessed value, and

• limits to the inflation rate any increases in assessed value beyond the benchmark, but not to exceed 2% per year.

That's California's groundbreaking Proposition 13, passed in 1978. (As usual, New York is only 30 years behind).   It's what a real tax cap looks like.

A majority of states that provide direct democracy in the form of voter initiatives have real tax caps.   The teachers union and its fellow travellers in the schools establishment and elsewhere say tax caps compromise quality of life, especially (of course) "for the children."  Isn't it strange, then, that the states with real caps in place are the states people move to, and places like New York, run by a spenders' coalition led by the teachers union, are the places people move away from?

If the quality of life purchased by New York-style through-the-nose taxation were so great, you'd think all the people in the mass exodus from New York would be sticking around.

Although we believe the Governor proffers his tax cap in good faith, it illustrates a prime danger in the road toward actual tax relief in New York.   When public pressure finally frightens Bruno and Silver into acting, you can bet your life savings that what they'll propose is a "property tax cap" that will be (a) utterly toothless; and (b) adopted with great fanfare about "listening to the people" and responding as the true champions of tax relief.

In every state where a citizen-led tax cap initiative made it onto the ballot, the state legislature placed its own, watered-down version of "tax relief" on the ballot to compete against it.   In each case, voters could tell, and chose, the real thing.   In New York we don't have that choice.   The Governor's functionally useless version is the only game in town.

It's the basis from which negotiation with the Terrible Twins, Silver and Bruno, begins.

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