A shift in social attitudes

The campaign from the right tried to make the 2012 Presidential election a repudiation of President Obama’s economy.  The message was; there isn’t enough job growth, the economy is sluggish and the deficit is too high.  Many voters did buy into this message.  The electorate clearly moved to the right in this election. 

Most Americas it appears are fiscal conservatives.  In the past, when the economy was slow or sluggish, the incumbent faced certain defeat.  Votes may want their religion and their guns, but what they really want is a job and a future for their children.  There is nothing wrong with that.  After all, the thinking goes, without a healthy economy it may all be for naught.

With the blind confidence that the right’s strategy to focus on the economy was the correct one, many thought the voters wouldn’t notice the other ideas that the right would bring quietly with them to their elected posts.  But, those Republicans who could not be controlled by their party came out of the woodwork.  (Maybe a better word than “woodwork” might be “cave”.)  Most of the ideas from the most extreme Republicans were talking points from a century ago.  Birth control, rape, abortion, race, the rejection of gay rights, the role of government (or lack thereof) and many other old, tired ideas.  While the generation that came from those times may have been happy to talk about them, those from the last two generations rolled their eyes.

With an economy portrayed as being bad and an electorate that shifted to the right (actually, more like a shift to the center) should have been enough.  But, the social positions that the right holds so dearly brought it all back to focus.  It turned enough voters back in support of Obama. 

This represents a fundamental change in the social attitudes of the country, as slight as it may be.  In this election cyle, a president with a liberal social agenda won in what was portrayed as a sluggish economy.  Perhaps as many as four states (three for sure) supported marriage equity.  The voters want the financial reforms that came out of the crisis to stay in place.  They supported the continuation of the health care reform.  The right to choose will be left in place.  Gay rights will be supported by more and more people.  Also, many other ideas from the last two generations will now become accepted as part of a new life of freedom and security in the country.

If the Republicans continue with their current track of holding on to old social ideas they will soon be obscure.  But, if they change they may have a chance.  That of course, in the irony of the times, is actually what they are fighting against.

Home prices are at their lowest in years, so are property taxes

Home prices in Michigan are the lowest they have been since 1994. Local property taxes that are collected based on the value of the property are, of course, at their lowest in many years. The rise and now the fall of property taxes have placed many local budgets in a crisis. That is why there should be no property taxes based on the value of the structure for individuals or for businesses.


As an example, in Wisconsin, they are running into trouble on the taxes placed on property based on the value. In 2008, a Wisconsin state law allowed local communities to place a limit on the type of challenges that individuals and businesses can make on their property taxes. Local communities were allowed to limit the challenges to the local Board of Review only. But, a large rental property owner sued to have a court review its assessment. The state’s supreme court recently rightfully ruled that individuals and businesses have a right to challenge the tax assessment beyond the local board of review, in support of due process. This means that communities in Wisconsin and around the country are going to have difficulty preparing budgets because there will be challenges to the revenue stream.

Property taxes are one of the most arbitrary taxes we pay. The amount of the tax is based solely on what a local Board of Review thinks the property is worth. The value of any property can’t truly be determined unless it is sold or is used to generate income. But even after a sale, the value of the property may change dramatically from year to year based on issues that are market driven and out of the control of the property holder.

Additionally, those that pay the highest property taxes; homes with high value, homes that have been improved or property that generates income; are those that help the community maintain the overall property values of the community the most. To tax them more, based on arbitrary values, is counter productive.

Communities need stable revenue sources to provided needed services. Even the most minimum of services, like police and fire, will have a consistent cost from year to year, rising with inflation and other factors. Over the last few decades, property values have increased enough to provide communities with a growing revenue source that kept ahead of inflation. But in the past couple of years, that has all changed. Property values are now falling, forcing down the amount of tax revenue received.

Local communities need to base the taxes collected for local services based on another idea. The way to approach this might be on “unit” collection. All property would be valued not on market value, but on size and type of property. All vacant property would have one tax based on the size of the property. Residential housing would have another value based on the size of the lot and the square footage of the structure. The larger the structure, the more tax. Commercial, retail and industrial would have the same concept perhaps just different numbers and taxes.

Details do need to be worked out. But, a stable revenue source for communities would mean that services won’t be cut just because revenues are down. Property owners in a community would also know from year to year what their obligation will be. If the value of their property rises, they will not suffer because of it. Finally, an improvement in the individual housing or business unit property wouldn’t mean that there will be an increase in taxes.

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Road commissions are getting the heat

Road commissions everywhere are feeling the heat after the winter storm that hit Oakland County and other areas of the country.

In Oakland County, Michigan, the last snow fall wasn’t really that bad. Historically, it was just about average for a winter storm. It dumped about three inches on top of icy slush. The drive to work on Monday morning was slow going and dangerous. Some people took up to two or three hours to get to work because of accidents caused by road conditions.

The road commission is being blamed for the mess when we only have ourselves to blame.

Municipalities are under tremendous stress because of budget short falls in the last couple of years. The tax system that has been developed to provide funding for all the services we have come to expect from city and county governments is flawed. With housing values falling, foreclosures taking homes, income dropping from those that are still working and unemployment reaching record levels, the flow of cash has been reduced.

No one wants to pay more for anything, including taxes, for the goods and services that we need. On a personal basis, much of what we purchase are things that we really don’t need and can be placed on hold until we have better income. But, much of what we spend our money on is for the important things like fuel to get around, insurance and health care.

Cities and counties provide some of the most basic services. Police and fire protection, water, sewer services and road maintenance. When budgets are cut because of the loss of tax revenue, those services need to be curtailed or eliminated.

Politicians only have two choices when it comes to budgets. They can either cut expenses or raise taxes. Right now, they are cutting expenses on some of the most needed services. In some cases, they are eliminating the some services completely. Some municipalities are disbanding their police protection or are partnering with other communities to share their fire services.

Raising taxes seems to be out of the question for most politicians. The anti tax movement in the United States has taken hold of the voters. Residents won’t even examine the situation that their community is in to consider a short term tax increase. This would allow the services that are important to a community to be maintained while moving through the slow economy.

There is the argument that raising taxes would increase the cost and harm a recovery. But, better the cost you know than the one you don’t. If the situation of curtailing services continues such as road maintenance during a winter storm, social costs are going to rise. These costs we often don’t know the exact amount and once they are part of the cost structure, they are difficult to impossible to get out. Keep in mind, people that arrive to work late cost their employers money that goes into the cost of the product. Every accident that is a result of poorly cleared roads during a snow storm will increase insurance rates. Pot holes and broken pavement increases the cost of auto repairs. The increase in crime because of poor police protection will have an effect on the cost of everything. Fire protection that is subpar will allow fires to destroy more, increasing the cost of building materials and insurance. The cost of curtailing services will also mean people will lose their lives.

Communities need to do two things. First, they must decide what level of services is important to the safety of the community. This can be set by the residents but most also consider industry standards, social costs and the priorities of other communities. Then, they need to understand that in order to sustain the level of service that they expect, there needs to be a tax revenue stream that provides enough funding. That means that during a slow economy, as we are experiencing, there may need to be a short term tax increase to get the community through.

No one, as said before, wants to pay more than necessary for anything, including taxes. But, paying less than what is needed to maintain an adequate level of services only means that the social cost of everything else will increase.

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Let's Hear What Goldman has to Say Today

Lloyd Blankfein, left, will testify before congress today about why the investment bank didn’t raise the alarm about the mortgage meltdown.

Let’s all listen to what he has to say.