Saturday, April 15, 2006

Letters From: The Coyote re-Taxes On Wealth And Savings

Taxes on Wealth and Savings

Most taxes are on income or sales, and so they are at least marginally calibrated with an individual's cash flows. The exceptions to this are property taxes and inheritance taxes. These two taxes both go after an individual's savings -- property taxes mainly on the home, the primary savings vehicle for most Americans, and inheritance taxes on everything you've saved when you die.

Lets take property taxes first. Many people complain that modern life has become a treadmill, forcing families to work harder and harder to keep up their lifestyle. To a large extent, I think this is a myth - people may be working harder but their effective standard of living is way, way higher than say 30 years ago. But one of the things that definitely creates a treadmill are property taxes.

Many people have worked hard to pay off their mortgage, thinking they could settle down into their retirement in a paid off house. Unfortunately, they may find that their home has increased in value so much that their property taxes at retirement are actually much higher than their original payment on the house. Take the case of a couple who bought their house in an urban area for $25,000 and find its now worth $375,000 forty years later (this is an average urban price increase over the last 40 years). For simplicity, we will assume the effective tax rate has stayed at $1.50 per $100 for these forty years (though its more likely to have gone up). In 1965, they paid $375 a year in taxes. Today, they have to pay $5,625. In other words, their property taxes today are over 22.5% a year of the original price they paid for the house. Now, this is all fine if the couple strove to work up the corporate ladder and get promotions and grow their income proportionately. But what if they didn't want to? What if they just wanted to buy that house, pay it off, and live modestly selling driftwood sculptures at farmers markets, or whatever. The answer is, because of property taxes, they can't. Likely they will have to sell this house, give up the urban life they wanted, and either move to an urban dump they can afford the property taxes on, or they move out to the country. Here is an example, via Reason, of this process of property taxes forcing out urban residents living small in favor of yuppies living the dream. It is ironic that a tax initially invented for populist reasons to cut back on wealth accumulation hurts the lower income brackets and those trying to step off of the capitalist treadmill the most. In fact, it was the poor in the Great Depression who typically lobbied for laws to put moratoriums on property tax collections.

The estate tax has many of the same origins and issues. The biggest downside of the estate tax is that it tends to force premature sales of productive business assets to pay the tax. Rather than leaving small businesses in the family, who have the experience and passion to make them work, they typically must be sold to third parties outside the family to pay the estate taxes. Again, the law of unintended consequences crops up - estate taxes and the sales they force have done more to contribute to merger and acquisition activity, which in turn drives consolidation of economic assets into fewer and fewer corporations. The tax meant to stifle wealth accumulation among individuals has in fact spurred wealth accumulation among corporations. While used for many purposes today, LBO's, that bogeyman of the left, were invented to manage this estate tax forced sale problem.

Friday, April 14, 2006

Letters From: Champaign

Blowing in the Wind

The NG [Champaign News-Gazette] editorialized on April 10th about wind power, and a bill languishing in the General Assembly that would mandate that the power companies generate 2% of their power from renewable sources by 2007, and 8% by 2013.

One key quote, “It was a win-win for everyone.”

I beg to differ. If it was a win-win for everyone, why do we need legislation to mandate it? The answer of course is that wind power is still more expensive. The NG later tried to show that the cost increase is negligible, but they reference the estimated cost increase as the result of a Com Ed voluntary (and minor) measure, not the proposed legislative mandate.
Wind power may become a viable power source, especially considering the increasing costs of traditional inputs like coal and natural gas. But if you need the force of law to make power companies use it, there must be a fly in the ointment somewhere. Categories: Government/State, Energy -->
- - - redstatewannabe at April 12, 2006, 2:12 pm

Bond House Gives IL Negative Rating Over Pensions

Associated Press News wire article:

April 14, 2006
(AP) SPRINGFIELD, Ill. A New York bond-rating house has given Illinois a "negative outlook" rating based on concerns that the state won't be able to meet its growing pension obligations.Fitch Ratings gave negative outlook rankings to only two other states -- Michigan and the hurricane-ravaged Louisiana.The negative outlook ranking means that Fitch is considering lowering its rating of the state by one notch.A Fitch analyst warns that the state's double-A bond rating is in danger of being downgraded in the next year or two, meaning state
borrowing costs would increase by millions of dollars.Illinois has a $39 billion funding shortfall in pension funds -- and costs are growing every year.

So, we're right behind New Orleans and Detroit, huh? That's comforting. We hope all of the public employees vested in these plans have a little something set aside in private plans.

Letters From: the Woodford County Journal

We don't usually get involved personal disputes in politics. However, due to a couple of phone calls on this letter and it's parent, from Mr. Welch, we're going to "reprint" it here:

Welch Letter Was Off-Base -

Uninformed, misinformed, or contrary. [sic] I am not sure which type of person John Welch would qualify as after the letter to the editor concerning Tiera Darnall-Charlton. [Ms. Darnall-Charlton was never mentioned by name as far as we remember]

Uninformed; because the only home on the tax rolls at the time of filing of the petition was in Palestine Township.

Misinformed; because someone gave him bad information.I believe residency only requires a mailing address. You do not have to eat or sleep there.

Contrary; what purpose did the letter serve, other than to discredit Mrs. Darnall-Charlton, since the primary was over[at the time of the letter]? Perhaps Mr. Welch considers her as future competition since PTELL[Illinois' Property Tax Extension Limitation Law] became an issue with his support and her opposition. I noticed a large ad in the [Woodford County] Journal did not include her name as being back on track. [we have no idea what that sentence was to mean]

Of course, my name was not included because of my opposition of [sic] PTELL, which was in support of the county citizens present at the meeting [we think he means the majority of the people speaking at the County Board meeting where a vote was taken on allowing a ballot referendum on PTELL spoke against allowing the folks to vote on it - the school districts, libraries, etc. were disproportionately represented]

Misinformed; may be the best term since I have heard the statement, "PTELL will cut taxes." Not true. The people who cut or raise taxes are the members of the board. Show them where to cut services the public does not want and tax cuts may follow. [see below]

I made a statement during campaign conversations, [that] I felt Tiera with three small children may not have time to do a good job as a Board Member when also working full time. [see below] I do hope she decides to continue in public service in the future. Those willing to spend the time and effort are too rare [see below]

- - - Kenneth M. Uphoff
[Woodford County Board member from District 1

Now, with regard to Mr. Uphoff's assertion that:

' "PTELL will cut taxes." Not true. The people who cut or raise taxes are the members of the board. Show them where to cut services the public does not want and tax cuts may follow. '

We've never heard ANYONE, EVER state that PTELL will cut taxes. PTELL will reduce the rate of extension growth. PTELL communities, over time, show rates of slower government spending. PTELL helps send a message to government taxing authorities that the folks want to be involved, and WANT TO BE ASKED about government spending plans and priorities. (witness the District 150 school building fiasco over in Peoria). Mr. Uphoff knows that without PTELL, the County Board has VERY LITTLE to say about overall county taxes. They can only control the County's portion of our taxes. The majority is controlled by the Boards for the School District, Libraries, Fire Departments, ICC, the city councils, the Townships, etc. As a citizen, try going to all of those board meetings each month to keep these Boards on track. Don't forget to attend all of their individual Committee meetings as well, because that is where the real business is done. In addition, to be sure, it's a little duplicitous at best, and immensely condescending at worst, for Mr. Uphoff to tell the voters that it's THEIR responsibility to show the Board where expenses can be contained and then assert, "tax cuts MAY follow". We read that as, "yeah, we might cut tax rates - we might not. What cha 'gonna do 'bout it?" This is not transparency in government. This is opacity in government.

Mr. Uphoff continues "damning with faint praise" Ms. Darnall Charlton. It comes off as sexist and insulting. After referring to "Mr. Welch" several times, he calls her "Tiera" and questions her ability to serve because of her family. Would he question the same about a man with "three small children"? After that, he states his hope she will serve in the future - presumable when Mr. Uphoff comes to believe that her children are old enough to scrape by without her for a few hours a month.

Unfortunately, we believe Mr. Uphoff is his own worst enemy . . . and we actually rather like the guy; sometimes though, that is not enough. We need a Board more in touch with "the folks" and the future.

Wednesday, April 12, 2006

Whose Money Is It, Anyway?

Now, we're not huge fans of " statistically adjusted" opinion polling; especially when it's supposedly national, and most especially when 900 voters are the totality of the sample. None-the-less, we offer for your reflection and consideration -

FOX News/Opinion Dynamics Poll, released April 12, 2006:

How much of the money you pay in taxes do you think is spent on government programs that you personally favor and support?

April 4-5, 2006 -
Almost all 7%
Some 36
Not much 34

None 11
(Don’t know) 12

After federal taxes are collected from the American public, do you think Congress thinks of the money more as taxpayer money to spend carefully or as their money to spend as they wish?

April 4-5, 2006 -
TaxPayer's 10%
Their's 80
(Both) 3
(Neither) 1
(Don’t Know) 6

(Polling was conducted by telephone April 4-5, 2006, in the evenings. The total sample is 900 registered voters nationwide with a margin of error of ±3 percentage points. Results are of registered voters.)

Letters From: the "Peoria Pundit"

This from Bill Dennis over at

• Woodford County keeps trying to shoehorn long-time rural residents into a zoning system designed for new suburbanites. It won’t work.

Speaking Of Woodford County Revenues

From the Illinois Dept. of Revenue -
their 2004 "Payments to Local Governments" publication:

Woodford County

Charitable Games $ 0
Pull Tabs 5,073
Income Tax 878,257
Motor Fuel 652,246
Replacement Taxes 114,082
1% County Share 309,856
1/4% Countywide Share 574,288
Local Use Tax 143,521
Automobile Renting 0
County Motor Fuel 0
County Public Safety 1,326,200

Totals: $ 4,003,523

Get Some Coffee and Take A Moment

Just step back for a few moments and watch THIS.

Then remember these working folks as you go about your day, and maybe even say a little prayer.

(not responsible for lumps developing in throats)

"Real World" Property Taxes

When this year's tax assessments arrive in the mail, we will update the following and additionally, be adding several more "real world" Property Tax case studies. Often when talk turns to equalized assessment rates, abatements, TIFs, and levy rates, what is missed is the real world impact of these arcane tools. Therefore, for your perusal, one Woodford County family's bill:

(The chart was too big to post; still trying to work out the graphic bugs in the system.)

You may view it here. Use your "back button" to return.

The numbers for taxable year 2001 were unavailable and so no rates of increase for those two years were possible. The averages are for 2003-2004.

If you would be willing to anonymously share your tax data, please contact us at

Tuesday, April 11, 2006

Woodford County Campaign "Lies"?

The following is from the PJS "letters" page of 4/11/06:

Thank you to voters in Woodford County District 2 for your support in the recent primary election. The only regret I have is the lies that were told about Arden Baldwin and me.
Voters were led to believe that Arden and I voted to raise overall taxes by 44 percent. That is simply not true. We voted to raise only the county portion of our taxes, which is a very small portion of our tax bill.
The reason for the increase is the county operating fund, which was soon to be in deficit due to large increases in workman's compensation and insurance costs, as well as an increase in wages for county employees. To vote against that raise would have been irresponsible.
In reality, taxes are increased or decreased by several taxing bodies over which the County Board has no control. Schools are responsible for approximately 76 percent of the tax bill. Other taxing bodies include the fire districts, townships and libraries.
- - -Ron Call,Spring Bay

Mr. Call seems to be playing a little fast and loose with his terms. We're not aware of any campaign claim that the Board was responsible for raising "overall taxes" by 44%. We believe what was stated or implied was that the levy was increased by 44%, which it was. Mr. Call knows this. Board and ex-Board members have no problem boasting that Woodford County taxes were "discounted" (lowered) this year, but if you look at your tax bill, you will see this is not true. They just decrease the levy a bit when they realized they'd over reacted the year before. We say take credit for one - take blame for the other. By the way, our own personal County portion of the property tax increased nearly 168% last year.

(When this year's bills arrive, we will post several 4-year case studies of real homeowners' property tax assessments.)

Mr. Call also implies that the increase was somehow a dedicated raise to go specifically for insurance, workers' comp, and "increase in wages". Of course, that is not the case. We don't know about your family's "operating fund", but most families when faced with increased expenses in one area, make CUTS in other areas. It's called fiscal responsibility. That is the larger point. There are those that vote for tax increases and those that don't. Mr. Call and Mr. Baldwin sided with the former.

We do agree with Mr. Call's last paragraph. That is why we need a PTELL referendum in Woodford County.

Monday, April 10, 2006

Yeah, we "got your back"

We just returned from our local School Board meeting. There was a student/teacher presentation on a program in which the kids participated in Springfield at the Statehouse. Fine. The kids were pretty articulate; but here's the deal. (I've noticed this at other "public" meetings as well - perhaps most noticably at the County Board meetings.) The meeting room was set up so that the presentation was made to the Board, so the kids and the teachers had their backs to we peasants (the "audience"). The public is always referred to as "the audience". We find that interesting in and of itself - but we digress. At the end, the teacher expressed profuse thanks to the School Board, the Administration, the Superintendent, the kids, everyone in sight for the opportunity the program represented - everyone except the taxpayers, that is. Then again, we weren't in sight. We were behind them.

All of these Boards need to set up their rooms so that they at least give the appearance of the Board and the "audience" being on the same side. It's a psychological thing. We are on the same side, aren't we?

Letters From: Citizens For Reasonable And Fair Taxes

Threats, threats and more threats

This past election we saw one of the greatest numbers of school referenda pass in recent history. On March 21st 66% of referenda passed statewide. Typically at least 60% fail statewide; sometimes as many as 80% fail. What was different about this election? The level of threats from the very people entrusted to protect and educate our children while not in parental care made the difference.D-300 superintendent Arndt stated he did not use threats, that he was going to follow through with cutting programs and going to split shifts. Seems like he did not use a dictionary much when he earned his Ph.D. A threat is a threat whether you follow through or not. One definition of threat - "A statement of intention to inflict pain, injury, damage or other hostile action on someone in retribution for something done or not done."D - 158 in Huntley took the lead in using threats to pass referenda.Paid pro-referendum activist Cheryl Meyer contributed to these despicable acts to pass referenda in both D-158 and D-300. Schools network through school boards, associations, teacher unions and administrator associations. You can bet they well be sharing the idea of using threats to pass referenda. These same tactics will be used in November.Referenda passed because of fear. Ordinary citizens are now afraid of their own government. This is the turning point for the Illinois public education system.Our government run schools a.k.a. our public education system has now become even more powerful. Until the people are willing to stand up to our government run schools and the very people charged with educating and protecting our children, property and income taxes will continue to rise.The level of waste and corruption in our government run schools will continue to rise. Government schools refuse to be accountable with our tax dollars or the education of our children. With every referenda and tax increases that passes, government school employees hold more power over our legislators in the form of lobbyist funds, campaign funds and threats to their legislative seats.

- - - Jim and Cathy Peschke;

Getting Less Stupid With Stossel

Watch "Stupid in America":

20/20 News VIDEO #1: Stupid in America

20/20 News VIDEO #2: Unhelpful Unions?

20/20 News VIDEO #3: Making the Grade

We Have An Illegal Immigration Plan . . .

Here's an idea -

Let's go ahead and make the "11 million" illegal immigrants legal. They would become legal after 5 years of service in a new "Border Security Force" under the auspices of the military, and be stationed along our borders to prevent future illegal immigration.

Discuss amongst yourselves.