Here's a news release sent in today from Democrat Chris Barons, a candidate for state Assembly in the 39th District.
The cost of local government and schools is the fastest growing taxpayer burden. That burden is magnified by basing local taxes on real property value. Property tax is unfair and punitive. It establishes a recurring, non-transactional fee on ownership.
Taxes should be a measure of prosperity. Property ownership is an investment not a benchmark of prosperity. Only 54.4 percent of New Yorkers own homes. Property taxes contribute to neighborhood blight when property owners opt against upkeep to avoid increasing taxable value.
In our fragile economic climate, with as many as 17.5 percent unemployed, millions laid-off, and New York leading the nation in first-time unemployment claims, local governments cannot ignore the fact: property taxes do not adjust for fixed or reduced incomes.
My solution to New York’s tax burden is to scrap property taxes AND sales tax. Replace both with a 4 percent residential flat tax and 3.8 percent Value Added Tax (VAT) for business.
With a state GSP of $1,144,481,000,000 and personal income at $828,443,000,000, the net result would be over $74 billion in tax revenue.
With renters direct-paying local taxes, rent bills that include the cost of property tax must be adjusted. To encourage landlords to reduce rent bills, a Rent Adjustment Credit for landlords who lower rent in lieu of property tax will be built into Form IT-214, Claim for Real Property Tax Credit for Homeowners and Renters.
Value Added Tax is misunderstood by many. Essentially it taxes profits on products or services.
Example: a sump pump company buys castings at $5 apiece, tools and assembles them as a sump pump at a cost of $15. The finished pump is sold to a retailer for $40. The value added is $20, which is taxable. The retailer sells the pump to a customer for $80. The value added is $40, which is taxable.
In the case of service providers, the cost of sending a cleaner to a business for eight hours is $60. The cleaning company charges the business $75. The value added is $15, which is taxable.
For financial institutions, the banks pay a VAT on disposal of mortgaged securities, investment and financial services.
The elimination of property-based taxation would especially benefit farmers -- for whom land ownership is a critical investment.
Besides alleviating the unfair burden placed upon taxpayers, eliminating property taxes would jettison the bureaucracy necessary to administer it. A 4 percent residential tax and 3.8 percent commercial VAT would also generate sufficient revenue to accelerate satisfaction of New York State’s overwhelming debt.
I wonder what effect a VAT
I wonder what effect a VAT would have on NY tourism and out-of-state shoppers? My gut tells me it would make NY a more expensive choice for out of state shoppers and vacationers. I wonder how readily the effect of this could be predicted?
CM, If you made the change to
CM,
If you made the change to a VAT, then no more credits.
You would also have to have a 3/4 majority vote to raise the level of the tax, or it will be 20% before you know it.
Personally, I like the idea of a flat tax with no exemptions. Everyone pays the same rate. But your idea has some merit.
Actually, Mike, if businesses
Actually, Mike, if businesses understand that their tax obligation is driven by profit margin, VAT should govern profit margins. Also keep in mind that my plan is to eliminate sales tax as well.
Keep in mind that this is
Keep in mind that this is just one phase of an overall plan. In addition to making local taxes fair- which the flat tax addresses:
We need to enact tax breaks that target local business growth and stimulation. My Local Enterprise Credit is one such targeted tax reduction that aims to foster local economies.
Thirdly we need to rein-in the cost of government. The entire state budgeting process needs reworking. Zero-based budgeting should be implemented wherever possible. We need to curtail off budget expenditures by prioritizing reduction of existing debt and re-incorporate independent authorities (currently operating without oversight) within the budget.
Borrowing (which represents the gravest disservice to our fiscal standing) should be reserved for civic projects and infrastructure development based on statewide Smart Growth plans. ...No more stop-gap borrowing.
We need to consolidate government without reducing grassroots participation in the process. We need outcome-based review. We need to foster inter-agency competition and shared allocation of resources. We need to put a stop to unfunded mandates.
We need to identify, prosecute and curtail fraud. We need to give our governor line item veto.
More than anything else- we need an open, accountable budget process.
And finally, we need to recapture revenue that has been rebated back to banks since the 1970s. The Stock Transfer Fees that would be filling the billion-dollar budget gap should not go back to banks- banks that are essentially triple-dipping at the well of public finance. Banks are profiting on every loan and bond, basking in bail-out money and pocketing fees intended as state revenue.
CM, I don't want to argue my
CM, I don't want to argue my thought to any great extent. I am neutral to the idea right now. But my point was, if sales and property taxes were replaced by a VAT, it seems intuitive to me that consumer goods prices would HAVE to rise to accommodate the tax. For NY residents, especially property owners the difference would likely be a wash on average. But visitors to NY would only see the higher prices due to VAT. It would put NY at a competitive disadvatage for tourism and out of state shopping. I would imagine that the effect of this VAT on out of state shopping/tourism would need to be evaluated to see if it would be worth implementing.
I'm not opposed to your idea. But I think there is some real potential for negative impact in this area that ought to be looked into.
I want to qualify, "Here's a
I want to qualify, "Here's a news release sent in today from Democrat Chris Barons, a candidate for state Assembly in the 39th District."
Casting no aspersions on local Democrats, I remain a member of the Green Party. I gratefully accepted the Democratic endorsement, and chose to run on the Democratic line.
My bid for a Green Party line fell short by a couple-hundred signatures. I just received notice from Kimberly A. O'Connor, Acting Supreme Court Justice, apprising, two, "citizen objectors," Barry G. Miller and Andrew Meier, had challenged my petition as Green Party candidate for Member of Assembly representing the 139th Assembly District.
Ultimately, the 500+ residents of the 139th who applied signatures in hopes of my name on the Green Party line were so deprived. I applaud the Monroe County Greens who did their utmost to facilitate my Green petition drive.
With a nod to my brother, James, a gifted artist; I am rolling out my fusion identity- The Green Burro.
< http://thebatavian.com/19783/green-burro>
If the image doesn’t embed, perhaps Howard can work some magic…
Green Burro
<a href="http://thebatavian.com/19783/green-burro">Green Burro</a>
CM, the first rule of the two
CM, the first rule of the two party system, is that no other parties exist. If you are running as a Democrat, you are a Democrat. During the campaign as well as if you win, you will always be referred to as Democrat.
Charlie, your point would be
Charlie, your point would be valid if it did not fly in the face of fact. The Republicans chose not to challenge my Democratic petitions. They challenged my Green Party petitions because they did not want to share independent votes, presuming independent voters a significant factor.
The Republicans and Democrats
The Republicans and Democrats will challenge any petition they think they can get tossed. I would give credit to Lorie and the other party chairs for making sure your Democratic petitions were right.
Regardless, if you run as a Democrat, you are a Democrat. You will always be called "The Democrat". There is nothing wrong with that either.
I acknowledge there is
I acknowledge there is nothing wrong with it; I accepted the endorsement.