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The second-day story, with your help. Call Gazette reporter Adam Belz at (319) 398-8273 or e-mail him: adam.belz@gazcomm.com

Tax abatements: No way, no how

Rod Sullivan, a Johnson County supervisor, addressed the issue of property tax relief for flood victims in his weekly Sullivan Salvo — an e-mail newsletter. Here’s an article I wrote on the issue last week, and here’s what Sullivan said: 

 The Board recently addressed the topic of property tax abatements for
properties affected by the recent floods. I am opposed to property tax
abatement. Here are eleven reasons why:
    1. The taxes paid are based on the assessment from two years ago.
Taxpayers are paying for services already provided, based upon the condition
of the property at that time. This is VERY important  here is why. After
the 1993 floods, almost every valuation in the flooded areas went up
considerably (when compared to pre-flood valuations) within one year. If
people choose not to rebuild, their taxes will reflect it next time.
    2. Abatements affect ALL taxing bodies; in Iowa City and Coralville,
about 40% of each tax dollar goes to the ICCSD.
    3. Abatements take tax money that governments require in order to
operate. Governments have incurred tremendous costs through this whole
process. Cities (and counties) can (and perhaps should!) address the needs
of homeowners and business owners in other ways. Johnson County is already
providing assistance to anyone affected by the flood, regardless of income,
through a substantial donation to the United Way Flood Relief Fund. Other
folks can qualify for additional County benefits based upon income and
resource guidelines.
    4. Similarly, governmental budgets are built upon the expectation that a
certain dollar amount will be collected in taxes. If a government can
suddenly decide to forego this income, what in the hell were they doing
collecting it in the first place?
    5. Affected people do not expect MidAmerican to provide free gas and
electric, Hy-Vee to give them free groceries, or BP to provide free gas. Why
would they expect local governments to provide costly services with no
revenue? Why is the public sector expected to forgo revenues when the
private sector is not?
    6. I write frequently about the inequities in our tax system, and the
idea of a property tax abatement strikes at the heart of these inequities. A
person who rents a trailer in North Liberty and works at a fast food place
on the Strip is now out of a job. If the Board grants a property tax
abatement, she gets nothing. On the other hand, a guy who owns 200 apartment
units and lost 8 of them to the flood gets a tax break. Granted, I
understand that he has very real losses. But what about her? I believe that
the role of government is to provide a hand up for those who need it, not to
comfort the comfortable.
    7. People who lost property to the flood are far from the neediest among
us. Only 50% of the population in Johnson County owns a home. There are lots
of poor folks out there who lost their rental homes and never owned anything
to begin with. A person with a home has a valuable asset that almost half of
us lack. If taxes become such a burden that you feel it is no longer worth
owning property, sell the property. This sounds callous when posed to a
flood victim, but we need to look at all flood victims, not just property
owners.
    8. Some of the affected businesses are run by local franchisees that
will need help. Other businesses are corporately owned, by companies with
billions of dollars in assets. If we can only help one, which should we
help? Abatements give us no control over that situation.
    9. Some people always assume that landlords deserve a set amount of
profit. If an individual invests in the stock market, we assume she took
some level of risk. If the person invests in gold, we assume she took some
level of risk. When a person invests in the local real estate market, we
assume she is somehow entitled to a certain profit. We do not hear the tax
hawk politicians pleading with landlords to accept less profit and help out
flood victims; it is somehow the job of government to help them. Yet do it
with less tax revenue.
    10. Deciding which circumstances qualified for abatement and which did
not would be a very difficult process.
    11. Finally – and I REALLY want to emphasize this – I am not opposed to
helping people who need help! As a matter of fact, I think that is one of
the primary roles of government. I just think tax abatements are a dubious
way to do that. For example, say a billionaire landlord who lives in Chicago
wants an abatement. I’m not sure he needs a tax break the way others might.
If they all just pay, we can redirect money to those most in need.

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Filed under: County Government, , ,

2 Responses

  1. marasm says:

    Is it fair to tax individuals with higher incomes with higher tax rate? So it means that we are taxing direct consequence of education, since more years of eduction means higher income (proven empirically). So this means that in some sense we discourage people to get education…
    http://www.empirics.org

  2. H J Becil says:

    Tax free weekend
    Will the Gazette be running stories next week on the upcoming tax free weekend?
    If there are articles and if the story features legislators taking bows for the tax free weekend, consider that the legislature has compensated for the revenue that would have otherwise been received on that weekend.
    So if we reduce the share of sales taxes paid to the state, where is the money made up – property taxes? Put another way, why do politicians think it is a good idea for one weekend only to shift from a consumption tax to another kind of tax?
    Why not use sales tax free weekend to have a serious discussion about how taxes are raised and spent in Iowa?

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