STUMP » Articles » Taxing Tuesday: Election Results » 20 November 2018, 17:45

Where Stu & MP spout off about everything.

Taxing Tuesday: Election Results  

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20 November 2018, 17:45

It’s been a busy couple weeks for me, so I’m just getting around to looking at the tax-related election results.

Governing covers: The Week in Public Finance: How Tax Policies Fared at the Ballot Box

With a few exceptions, voters across the country on Election Day approved statewide proposals to reduce or limit taxes while also widely rejecting any efforts to raise them. But that wasn’t the story at the local level, where several tax increases passed.

Yup, state vs. local issues are very different… but we should also look at the details of those specific local tax raises… because you may find out that said taxes were very targeted.

Revenue-raising proposals saw more success at the local level.

Denver voters approved a slew of tax increases, including sales tax hikes to help fund parks and mental health services.

In San Francisco, voters approved Proposition C, a controversial measure that will increase a gross receipts tax on the city’s largest companies to help fund homelessness initiatives.

Down the peninsula, Mountain View, home to Google, approved a so-called head tax on companies to raise money for transportation and affordable housing. Earlier this year, the Seattle City Council passed and then rescinded a head tax after threats from Amazon that the company would move jobs elsewhere.

Uh-huh. People voted to raise taxes on “those other guys”.

Not generally raising taxes. When it was obvious that it was a tax hitting everybody (like state level referendums), it got voted down.

But “tax those rich folks?” Sure.

TAXING THOSE OTHER PEOPLE’S HOUSES

For example, in Evanston, Illinois, they have a “tax those rich folks” tax, though there may be problems:

HIGH RISE: EVANSTON VOTERS CREATE A PROGRESSIVE ‘MANSION TAX

An increase in Evanston’s “mansion tax” will tighten the city’s squeeze on property owners making their way out the door.

You can move out of Evanston, but some residents will pay more to leave because voters Nov. 6 approved a higher tax on the city’s priciest house sales.

Voters narrowly approved a ballot question asking whether to increase the city’s real estate transfer tax, also known as its “mansion tax,” on home sales of $1.5 million or greater, according to Crain’s Chicago Business.

So, what comes to mind for me: how many of Evanston’s homes are in that price range?

The tax hike will impose differing transfer tax rates on real estate sales. Taxes on a sale worth between $1.5 million and $5 million will increase 40 percent. Sales that surpass $5 million will spike by 80 percent.

Hmmm, now I have further questions…

Checking out Zillow listings, there are 401 homes listed for sale right now in Evanston.

I sorted the list, and found the most expensive listing at a hair under $3 million, and then there are 11 total listings at more than $1.5 million (one is exactly at $1.5 million… perhaps I should include it), and then an additional 12 between $1 and $1.5 million, approximately.

So out of 401 listings, less than 3% are in that “mansion tax” range. What do they think that small amount will do?

Revenue from the mansion tax goes to the city’s general fund, and is used to fund services including public safety, parks and recreation, and street maintenance.

The tax hike’s impact on revenue creation is likely to be minimal, however. As Crain’s points out, 17 Evanston homes sold for $1.5 million or more during the past year. The city recorded only two home sales greater than $5 million during that time. The median value of an owner-occupied home is $356,600, according to U.S. Census Bureau data. The tax on selling that median-priced house would be $1,783.

Exactly. And look, I mentioned 12 homes in that range were listed, but some have been listed for quite some time. This one has been there for 220 days.

Uh huh.

So I don’t really see this doing much other than depressing luxury home sales further.

But this is a problem with the “tax the rich folks” strategy. Obviously, one can always find more non-rich folks voting than said rich folks….

…but there’s not enough rich folks to tax! Ultimately, it hits everybody, if you really need the revenue.

TAX STORIES

TAX TWEETS







(looking at a translation:
Faced with rising fuel taxes, It’s still time to change our travel patterns, and with them the development of our cities and our campaigns. The government can act through the law on mobility! Sign the petition — this is pro-fuel tax in France, what is being protested AGAINST by those in the yellow vests.)







About that last one…

But then, tucked at the bottom of page five, there’s an item that’s already setting off alarm bells across the left. The rule—endorsed by Pelosi and Richard Neal, the top Democrat on the House Ways and Means Committee—would “require a three-fifths supermajority to raise individual income taxes on the lowest-earning 80 percent of taxpayers.” The Institute on Taxation and Economic Policy has called this idea “problematic.” Eric Levitz at New York magazine writes that it would create “a new — and all-but-insurmountable — obstacle to the passage of many of the policies that the Democratic Party claims to support.” A number of progressive House members have announced opposition, including newly elected Rep. Alexandria Ocasio-Cortez and Rep. Ro Khanna , while the activist group group Moveon.org called it a “staggeringly bad idea” on Twitter.

Progressives are alarmed by this idea for a few reasons. Some of their most ambitious policy ideas, such as Medicare for All, will likely require raising taxes on middle-income households at least a bit, and this rule could make that harder. It might also complicate efforts to reform the tax code, such as evening out the rates on capital gains and income taxes. That would mostly affect high-earners, but since some middle-income households might be impacted too, this rule—depending how it’s written—could trip up those efforts. Democrats seem to be handcuffing themselves before Pelosi has even picked up the speaker’s gavel.

via GIPHY

I assume none of this is going anywhere, but by all means, I am just fine with Dems exposing their tax-desiring ways.


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