NASA has engaged a Chicago company, Ocean Tomo, to auction off “a suite of 25 patents.” This is considered to be transferring technology to the private sector. I guess an auction is better than sleazy private deals. The main point to remember is that a patent is not the right to use an invention, it is only the right to prevent others from doing so. (via slashdot)
Category: Miscellaneous outrages
Unbroken record on overtaxing those who use land…
…and undertaxing those who just sit on land, waiting for its value to rise.
The 2006 data are now published, and once again the Cook County Assessor has overassessed houses (and the lots they occupy) in Chicago relative to vacant land. As in the previous year, data from actual sales show that, as a percentage of sales price, assessments on houses (including land) average 50% higher than assessments on vacant land. This is the reverse of the legal requirement, under which real estate which includes houses is supposed to be assessed at a 1/3 lower percentage of value than vacant land.
This amounts to is a further penalty on homeowners (and owners of condo’s, and 2-4 flats, too), as owners of vacant land aren’t carrying their legal (let alone fair) share of the tax burden.
Is Cook County uniquely corrupt or incompetent in this regard? Other Illinois counties do not even pretend to assess residential parcels at a lower percentage of value than vacant parcels. Rather, they are obligated to assess everything at the same percentage of value. In most cases where data are reported, however, the assessment as a percentage of sales price is considerably lower for vacant parcels than for improved real estate.
Source: Data compiled by the Illinois Department of Revenue, which can be seen here (look at the “ratio” links under “property tax.”
Nobody understands the income tax
That’s what Albert Einstein is reputed to have said, tho I’ve never found it documented. He might have meant that nobody understands the logic of a tax system that penalizes productivity and “put[s] a premium upon unscrupulousness and a tax upon conscience.” More likely he meant that no one understands how to calculate it. A recent prominent example could be Charles Rangel, who maybe really didn’t understand that he had to pay taxes on the income from renting his Dominican villa.
But today’s a twofer, because we also have a report that “[s]ome of the country’s biggest investment banks and brokerage firms…marketed allegedly abusive transactions that helped foreign hedge-fund investors avoid billions of dollars in U. S. taxes…” The big news isn’t that they cheated, but that they got caught. I bet they’ll be a lot more careful in the future.
The income tax is inherently difficult to administer. Many very smart people spend their working hours figuring out ways to avoid taxes. Other smart people spend their working hours figuring out how to eliminate the ways discovered by the first group of smart people. (Later those in the second group join the first group, whose work is more lucrative.)
Meanwhile, we ordinary taxpayers have to deal with more and more complexities, most inserted by the second group in a futile attempt to stop the first group.
Fairness in school funding
The Reader’s Ben Joravsky is one of many in the media making a big hoopla about how Chicago Public Schools spend a lot less per pupil than New Trier High School does ($10,049 vs. $20,811, according to Joravsky). Leaving aside the question of whether more money results in better education, some basic facts seem to be getting lost here.
(1) Comparing Chicago’s k-12 district to New Trier’s high school district isn’t meaningful. High schools always spend more than elementary schools, per pupil. I’m not going to try to explain why, tho it seems high school teachers are paid better than elementary school teachers. and maybe more specialized equipment and smaller classes are needed.
(2) Compared to most other districts, Chicago is wealthy. Since advocates say the main reason for the disparities is that some districts have a bigger tax base (more assessed value of real estate per student) than others, we’d think that Chicago’s tax base must be pretty poor. Sure, New Trier’s tax base is more than seven times as much, per student, as Chicago’s. That leaves plenty for them to share with the elementary feeder districts.
But how does Chicago compare to the 394 other K-12 districts in Illinois? Chicago’s $165,380 per student is higher than 92% of the other K-12 districts. And that’s even after allowing for the scandalous TIF extractions that have Joravsky rightfully concerned. (Check my work with the figures from here. Look on the left side under “file type” and download the xls spreadsheet.) Most of the K-12 districts have a tax base of less than $100,000/student.
(3) Disparities of local tax base can be remedied without raising income or sales taxes. If for some reason it’s necessary to increase state funding for local schools, that can be done without raising the income tax or sales tax. Wealthier districts could be required to “donate” part of their revenues to poor districts. Or the statewide real estate tax can be resurrected. Ideally, it would exclude improvements from the tax base.
Solar power brings more land speculation
I shouldn’t be surprised to read, in Fortune, that speculators are buying up sites with good potential for solar power generation. The article indicates that these are largely desert areas near major cities of the West, and particularly the Mojave near Los Angeles. Prices have increased from $500 to $10,000 (or more) per acre. Much of the site is government (BLM) land intended as a nature reserve; it’s not (currently) for sale but can be leased (prices not discussed in the article.) Continue reading Solar power brings more land speculation
Taxpayers give a gift to U. S. Sugar, or some of its shareholders.
Associated Press reports that the state of Florida will give U. S. Sugar $1.75 billion to take 187,000 acres out of sugar production and give it to the State for Everglades restoration. An “environmentalist” is ecstatic:
“In the old days, you didn’t just beat your opponent, you also ate them,” he said. “Today, we’re eating U.S. Sugar.”
This works out to about $9,000 per acre, considerably more than the price of good rural midwest farmland. According to the article, it’s become increasingly difficult to make a profit in the sugar industry– leading one to imagine that a similar result might have been achieved had the State spent nothing.
The article states that the 1,700 employees will lose their jobs– but the companies web site says that it is an employee-owned company– with 1700 owners. Looking at it that way, it’s about a million dollars per displaced worker. Tho I doubt that each gets an equal share of what amounts to a gift from the taxpayers. The San Diego Union Tribune says employees own only 30% of the company. That source also says that the company’s 30,000 acres of orange groves are included in the deal.
And according to the New York Times, insiders have been squeezing the employee-owners out. So there may be even more sleaze here than at first appears.
Assessor Houlihan raises marginal income tax rates
I’ve commented before on the conclusion, by several analysts, that due to means-tested assistance many people of low an moderate income can face marginal tax rates approaching or even exceeding 100%. That is, if you accept a raise, you might lose some of your food stamps, or medical assistance, or subsidized housing, or federal and/or state earned income tax credits, or other benefits “targeted” for low-income people.
Last week Cook County Assessor James M. Houlihan was kind enough to tell me about another means-tested benefit, that apparently has put some people into a marginal tax bracket of 2,000% or more. And they didn’t even know it, because tho just announced, it’s based on 2006 income.
He calls it the “Long-time Occupant Homeowner Exemption,” and it only applies to “homeowners residing in their homes 10 years or more.”
- If total household income for 2006 doesn’t exceed $75,000, the increase [in assessed valuation for the homeowner’s residence, apparently] will be limited to 7%.
- If total household income for 2006 doesn’t exceed $100,000, the increase will be limited to 10%
In both cases there is no maximum exemption amount.
Somewhere there is a longtime homeowner, whose 2006 income was, say, $100,005. That extra $5 might now cost her hundreds (or thousands?) of dollars in real estate taxes.
The impossibility of intelligent tax planning is far from the only reason this is a dumb idea, of course. The savings these longtime homeowners receive will be made up by the rest of us– including the first-time recent buyer struggling to cover an adjusting mortgage.
But I don’t mean to blame Assessor Houlihan exclusively for this nonsense. He says, and I’m sure it’s true, that it is established by the Illinois Legislature. And furthermore, he seens toi be embarrassed enough by it that it’s not on his web site at http://www.cookcountyassessor.com (or at least I couldn’t find it there). There is some mention of it at the City of Berwyn site.
Brach's site update
Back in January I noted a proposal to spend $141,000 of our tax (TIF) money per job “created,” to subsidize redevelopment of the old Brach’s candy factory site. Even more scandalous, the planned distribution center would have contained only 75 jobs on 30 acres within the densely-developed west side of Chicago.
Now comes a report that the City Council Finance Committee has delayed approval of the subsidy. Not because of the wasteful spending or small number of jobs created, but because some local people prefer that a school be built on the site. I’m not familiar enough with the area’s land use or politics to know whether this is a good site for a school, but at least somebody seems to be paying attention to the fact that land is a limited resource, and perhaps giving land and money away for a small number of jobs is a bad idea.
btw, the more recent report places the parcel size at 12 acres, not 30, which seems small to me but perhaps the area involved is less than the entire site of the former Brach’s facility.
More "sports" subsidy
Of course it’s well known that professional “sports” businesses receive big subsidies for stadiums, but I’d not thought about sales tax. In at least one case, the Super Bowl is exempt.
GAO on Funding Infrastructure
No great surprises in the new Gov’t Accountability Office report on: PHYSICAL INFRASTRUCTURE Challenges and Investment Options for the Nation’s Infrastructure. (Summary, full report). Roads, bridges, dams, railroads, airports etc are decaying and not keeping up with “demand,” and existing funding methods are proving inadequate. Is there a cheaper way to meet the needs? The report does not say. Is it worth spending what it costs to update the facilities? Not discussed. And perhaps most importantly, is there a way that the owners of land benefiting from infrastructure improvements could be made to pay for them? Well, one sentence recognizes some approximation of the possibility:
A variety of taxes have been and could be used to fund the nation’s infrastructure, including excise, sales, property, and income taxes. (p. 15)
That’s all.