Thursday, October 05, 2006

DeStefano Proposes Property Tax Relief

John DeStefano's property tax reform plan comes in stages. First, DeStefano is proposing the following take place right away:
  • A freeze on property tax increases for seniors
  • A $1,000 refundable rebate for all middle-class property tax payers
  • Immediate elimination of the tax on manufacturing equipment, which Connecticut is one of the only states to levy

Sounds expensive. In fact, DeStefano says it will cost about $445 million the first year. DeStefano has several strategies to pay for it:
A millionaire’s tax with two brackets will generate approximately $251 million, of which $173 million will be earmarked for immediate property tax relief. Paying for the rest of the senior property tax freeze and $1,000 rebate will be the $33 million currently allocated for “temporary” relief that goes to municipalities will be combined with $29 million from the surplus and $80 million raised through a temporary surcharge on the real estate conveyance tax. The repeal tax on manufacturing equipment will be paid for out of the surplus. As this tax is currently scheduled to be gradually phased out, added costs to future budget years diminish accordingly.

DeStefano then plans to push further reforms, including:
When the pro-growth initiatives and cost savings measures are underway, it will be possible to undertake comprehensive property tax reform. This reform must:
  • Increase basic state education support, consistent with levels found in other states.
  • Provide a minimum amount of funding for every community, even wealthier suburbs, because reform should not pit one type of community against another and property taxes are too high in all of Connecticut’s communities.
  • Compensate communities appropriately for hosting non-taxpaying uses.
  • Implement transparency and cost-containment mechanisms to ensure that this tax shift away from property taxes is not just a hidden tax increase.
  • Encompass Smart Growth principles.
  • Provide relief for small businesses including a $10,000 credit on their corporate income tax credit for property taxes paid.

I'll let you deconstruct the ideas, if you like. I'll post a link when it goes up on the DeStefano site.

But there seems a sort of futility to it all. Which is really too bad. A close campaign would have meant a real debate on the future of Connecticut (or a nasty, dirty campaign--take your pick). We could have used one.

14 comments:

Anonymous said...

Hasn't he spent this money already on his health care and energy plans?.

If I want to play three card monte, I can go to New York City

GMR said...

So under this crazy scheme, does a millionaire senior get a tax break because he is a senior, or a tax increase because he is a millionaire?

What about a poor family who has not yet attained senior status?

Does JDS not think that the millionaire tax might cause some millionaires to alter their behaviour so they don't actually pay these taxes? Like defer it for a year or two and take it while they spend 184 days in Florida?

The repeal on manufacturing equipment is actually a good proposal, although I think that everyone saw that recently.

Why the property tax rebates for small businesses, but not medium businesses or large businesses?

Going back to the freeze on senior's property taxes. If a given municipality freezes taxes on seniors, won't it have to raise property taxes on everyone else to get the same level of funding? Why would seniors ever vote against more spending, since they wouldn't be hit with the bill? Why should seniors get relief and not families with children, or single people, or poor people, or whatever other group? If someone bought a house for $40,000 in 1967 and now it's worth $600,000 and they have no mortgage, but they have difficulty making the $7,000 in annual property taxes, should I feel sorry for them, but not feel sorry for the next door neighbor in the identical house who bought the house last year for $585,000 and has a huge mortgage?

nedweenie said...

Seniors who have lived and paid property taxes for 20+ years need relief. They shouldn't be squeezed out of towns that they have lived in all their lives because the current breeders want a new hippodrome for Kaitlynn and Cooper during their 4 or 5 year stay in town.

My mother lives in Simsbury on a fixed income of 33K a year. She has been there 45 years, so she has certainly paid in her share of property taxes. Seniors vote against tax increases all the time. They are just outnumbered by the transient breeders.

Education needs to be funded some other way than property taxes. We're all paying way too much in this state.

Her little cape is worth 600K? Wow, I can't wait to tell her.

Anonymous said...

Who are all these republican supporters of Rell poo-poohing DeStefano's proposals?

Just what has SHE done to alleviate the burden of the middle class? CT is NOT just for the rich.

Just what has she done to repair our roadworks - i.e., highways, interstates, etc. Has anyone else noticed they DO NOT WORK?

The car tax elimination Rell proposed and then disposed of was a filthy, dirty campaign trick.

Let's get with the program here. CT is a blue state deserving a democrat for Governor!

ken krayeske said...

DeStefano's proposed millionaire's tax is a little far flung - why not levy a 1/16th percent increase per every $200,000 earned? Fred Carstensen of the University of Connecticut Connecticut Center for Economic Analysis sees it as more feasible than an outright millionaire's tax, and more lucrative for the state.

Secondly, let's undertake a massive tax incidence analysis. We all pay a specific amount in taxes, while it goes into three different pots (fed, state and local). The CT Green party believes that there is a way to rearrange those individual contribution to those pots that maximize their value.

Like we can eliminate the sales tax, which is regressive, and replace it with higher income taxes, which will get us more money back from the federal government, because state income taxes are deductible.

As we even out our revenue streams, we will eliminate our reliance on property taxes. Additionally, we ought to consider a state-wide mill rate for businesses to eliminate inter-town competition.

The state needs to step forward and work with towns to pay for education. Stopping the drug war and the crazy militarization of local police forces will provide us with more educational resources. The budget for the department of Corrections is more than $400 million. For what? So we can warehouse more black men for non-violent drug offenses than we send to college? Those 80 arrests in Waterbury the other day weren't cheap. Every cop means one less teacher.

DeStefano offers band-aids, not a balanced revenue portfolio, which is what we need to wean ourselves off the sprawl-subsidizing property tax game.

Blue Turned Red said...

It seems to me like DeStefano is an old time "New Deal" Democrat not in tune with today's realities. He acts more like a socialist than anything - offering free or state subsidized healthcare, energy, taxes, etc. He would need to raise taxes somewhere to pay for all this, and soaking only the rich won't cut it. The middle class will be the ones to pay as always.

It's funny when people like DeStefano call themselves "progressive" when all they do is repackage and propose old strategies that were proven to be ineffective in the first place.

GMR said...

Seniors who have lived and paid property taxes for 20+ years need relief. They shouldn't be squeezed out of towns that they have lived in all their lives because the current breeders want a new hippodrome for Kaitlynn and Cooper during their 4 or 5 year stay in town.

My mother lives in Simsbury on a fixed income of 33K a year. She has been there 45 years, so she has certainly paid in her share of property taxes. Seniors vote against tax increases all the time. They are just outnumbered by the transient breeders.


So why not give seniors two or three votes, and young families only one vote on election day? You seem to be implying that their needs for lower taxes are more important than other people's, and that the young breeders are squeezing them out.

As for the fact that they've lived in town for a while, doesn't that mean for the past 20 years or 45 years, they've benefitted by driving on the streets, sending their kids to school, having a police force and a fire department, etc? Every year, they consume, so why not pay for it as well? And what about seniors that are new to town? Should they get a break?

Believe me, I'm not for tax increases: far from it. But I'm also against giving one group a tax break, which means that the other groups are going to have to pay more in taxes (especially since the first group, which now no longer suffers in high taxes when they elect spendthrifts, will vote for more spendthrifts).

I would also imagine that any property bought 45 years ago is worth substantially more today than when it was purchased. Seniors get the benefit of the capital gain, untaxed (up to $500K, then 20% thereafter). I just don't understand why they shouldn't pay the same taxes as everyone else. If they truly cannot afford the taxes, and can't take a home equity line, then by moving, they'll free up their house for a young family. Isn't affordable housing for young families also important?

It's not just the Democrats that make the mistake of favoring one group over another. I'm a Republican, but am deeply disappointed that Republicans in this state see no problem with giving tax abatemens to UBS AG or try to give it to the NE Patriots or to that gun and hunting shop opening up in East Hartford.

Finally, higher income taxes: there's the issue that many of the millionaires in this state work in New York, and pay no Connecticut income tax.

Shadow said...

Ken has it exactly right here, so many great points. It really does seem at this point that Lamont voters in this state would be better served supporting and voting Thornton(G), and elevating him to double digits so that these kinds of platforms will have an actual shot at winning next election; it beats voting for DeStefano just so he'll lose anyway, but by ten points instead of twenty-five, leaving progressives no better after the election than before.

Having said that against DeStefano, I do still see questions lobbed at him that in all fairness deserve to be addressed with what I found to be clear answers from reading the proposal:


GMR: So under this crazy scheme, does a millionaire senior get a tax break because he is a senior, or a tax increase because he is a millionaire?

Sounds like both to me, and they both will partially or totally cancel each other out.


GMR: What about a poor family who has not yet attained senior status?

A good question, but sometimes positive reforms are incremental. The goverment can not be expected to fix everything for us at once.


GMR: Does JDS not think that the millionaire tax might cause some millionaires to alter their behaviour so they don't actually pay these taxes? Like defer it for a year or two and take it while they spend 184 days in Florida?

I'm sure if he does as anyone would; millionaires are constantly trying to duck and evade taxes, stealing from the economy and violating the law. Giving up and not trying to tax them hardly seems like an appropriate reward, let alone a feasible solution.


GMR: Why the property tax rebates for small businesses, but not medium businesses or large businesses?

Because small businesses are struggling in the current economy, as chains and conglomerates continue to ciphen off their customers, and small businesses also have less of a safety net in terms of assets and capital.


GMR: If someone bought a house for $40,000 in 1967 and now it's worth $600,000 and they have no mortgage, but they have difficulty making the $7,000 in annual property taxes, should I feel sorry for them, but not feel sorry for the next door neighbor in the identical house who bought the house last year for $585,000 and has a huge mortgage?

You should feel sorry for them. However, their problem is a product of the market and their own financial judgements, where the former situation is a direct result of goverment taxation. Although goverment can certainly be expected to reduce it's own taxes, it cannot be expected to solve the market's problems. Real estate speculators have been pushing the prices as far as they'll go for years now, and people nowadays insist on living ahead of their own means and going into debt. If that's not satisfactory for you, the only way to affect the goverment with any hopes of fixing this problem is by voting out Republicans, most of whom are owned by these elite market speculators that gouge us on oil and real estate, and who reduce prices briefly right before elections so that the Republicans stay in power. Otherwise don't complain, and tell that next neighbor to enjoy the free market.

Shadow said...

Ken has it exactly right here, so many great points. It really does seem at this point that Lamont voters in this state would be better served supporting and voting Thornton(G), and elevating him to double digits so that these kinds of platforms will have an actual shot at winning next election; it beats voting for DeStefano just so he'll lose anyway, but by ten points instead of twenty-five, leaving progressives no better after the election than before.

Having said that against DeStefano, I do still see questions lobbed at him that in all fairness deserve to be addressed with what I found to be clear answers from reading the proposal:


GMR: So under this crazy scheme, does a millionaire senior get a tax break because he is a senior, or a tax increase because he is a millionaire?

Sounds like both to me, and they both will partially or totally cancel each other out.


GMR: What about a poor family who has not yet attained senior status?

A good question, but sometimes positive reforms are incremental. The goverment can not be expected to fix everything for us, let alone at once.


GMR: Does JDS not think that the millionaire tax might cause some millionaires to alter their behaviour so they don't actually pay these taxes? Like defer it for a year or two and take it while they spend 184 days in Florida?

I'm sure he does as anyone would; millionaires are constantly trying to duck and evade taxes, stealing from the economy and violating the law. Giving up and not trying to tax them hardly seems like an appropriate reward, let alone a feasible solution.


GMR: Why the property tax rebates for small businesses, but not medium businesses or large businesses?

Because small businesses are struggling in the current economy, as chains and conglomerates continue to ciphen off their customers, and small businesses also have less of a safety net in terms of assets and capital.


GMR: If someone bought a house for $40,000 in 1967 and now it's worth $600,000 and they have no mortgage, but they have difficulty making the $7,000 in annual property taxes, should I feel sorry for them, but not feel sorry for the next door neighbor in the identical house who bought the house last year for $585,000 and has a huge mortgage?

You should feel sorry for them. However, their problem is a product of the market and their own financial judgements, where the former situation is a direct result of goverment taxation. Although goverment can certainly be expected to reduce it's own taxes, it cannot be expected to solve the market's problems. Real estate speculators have been pushing the prices as far as they'll go for years now, and people nowadays insist on living ahead of their own means and going into debt. If that's not satisfactory for you, the only way to affect the goverment with any hopes of fixing this problem is by voting out Republicans, most of whom are owned by these elite market speculators that gouge us on oil and real estate, and who reduce prices briefly right before elections so that the Republicans stay in power. Otherwise don't complain, and tell that next door neighbor to enjoy the free market.

Anonymous said...

geeze--I actually agree with Ken, that's horrible.

One thing is for sure, this R is not voting for the RINO Rell or tax and spend JDS.

Maybe I'll take Ken's ramblings more seriously....

GMR said...

I'm sure he does as anyone would; millionaires are constantly trying to duck and evade taxes, stealing from the economy and violating the law. Giving up and not trying to tax them hardly seems like an appropriate reward, let alone a feasible solution.

Millionaires are simply responding to incentives, and most of them undertake legal actions (and a few resort to extra-legal measures). Moving to Florida is not illegal. Even arranging your affairs so as not to pay higher taxes is perfectly legal -- that issue was settled in a court case early in the last century, with the judge with the strange name of Learned Hand writing the opinion.

Because small businesses are struggling in the current economy, as chains and conglomerates continue to ciphen off their customers, and small businesses also have less of a safety net in terms of assets and capital.

So if I buy paper towels at Walmart, and can get them for half the price I could get them at a local mom-and-pop shop, why should I then be forced to pay higher taxes so the mom-and-pop shop can have lower taxes, when they don't have the efficiencies in place to sell their items cheaper? They don't have sophisticated supply chain management systems, no enterprise resource planning system, no corporate performance management software, no RFID warehousing.

Small businesses have a place: they can offer more personalized service, and some people will utilize them. Heck, I go to a three man CPA shop for my taxes, not H&R Block, even though H&R probably has lower rates. But it's my choice. I should be able to make this, and not some guy in Harford deciding which businesses are worthy of a subsidy.

Real estate speculators have been pushing the prices as far as they'll go for years now, and people nowadays insist on living ahead of their own means and going into debt. If that's not satisfactory for you, the only way to affect the goverment with any hopes of fixing this problem is by voting out Republicans, most of whom are owned by these elite market speculators that gouge us on oil and real estate, and who reduce prices briefly right before elections so that the Republicans stay in power. Otherwise don't complain, and tell that next door neighbor to enjoy the free market.

I think Bush did a great job this year keeping gasoline prices low by preventing any hurricane from making landfall along the Gulf coast.

The reason that housing prices went up is because more people wanted housing than there was housing available. That pushed up prices. Some was speculators, some was families. There may be many living beyond their means, but the banks that loaned the money, and whose money is at stake, deemed them worthy.

Speculators are simply taking risks hoping to make profits: some are long, some are short. But in the end, the price is set by actual demand and actual supply.

Anonymous said...

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Additional tickets to Monday night's debate in New London between Governor M. Jodi Rell and John DeStefano are available! You can get yours by contacting the Governor's campaign by e-mail at debatetickets@jodirell06.com.

The debate is at 8 p.m. in the Garde Arts Center in New London. The event is sponsored by The Day of New London and will be televised by WTNH-TV. Come support Governor Rell as she lays out her vision for Connecticut's future and outlines her plans for continued economic growth, improved education and a better quality of life for all our state's people!

This is the only scheduled debate with a live audience -- don't miss this chance to be a part of history! Contact the campaign today for your ticket!

Anonymous said...

This whole thing is funny, because last year DeStefano proposed a 9% increase in property taxes in New Haven last year. He's not going to lower anyone's taxes.

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