Tag Archives: taxes

Considering a new utility tax in DuPage County to help address flooding

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These are the sorts of issues sprawl brings: the DuPage County Chairman discussed a new power available to the county to collect tax monies to address flooding.

Cronin told the audience at a Naperville Area Chamber of Commerce luncheon that flooding has long been a serious problem in DuPage.

In order to address it, he said, infrastructure improvements are needed. Right now, money for those projects comes from property taxes.

The proposed utility fee would charge property owners based on use. Those who have more stormwater leaving their land would pay a higher fee. Anyone with land producing less stormwater runoff would pay a lower fee.

Enacting a utility fee would make it possible to have charges for stormwater projects removed from the property tax bill, he said…

However, some residents already are opposing the idea. Last month, protesters demonstrated before a county board meeting and called the proposal a “rain tax.” Objections also are expected to come from schools, churches and other tax-exempt entities that would be required to pay the fee.

At this point, DuPage County is largely built-out (or the land is tied up in Forest Preserves) so dealing with flooding is largely taking place after the development has already happened. Thus, remediation can be quite expensive. I imagine residents and organizations would not like the idea of a new tax but flooding is a serious recurring issue.

On a related note about the cost and length of projects intended to combat flooding: here is a story about progress being made at constructing the world’s “largest reservoir of its kind in the world” in the south suburbs as part of the impressive Deep Tunnel.

A small crowd gathered Monday at the lip of the mammoth Thornton Quarry, all eyes fixed on an outcropping of dolomite nearly 300 feet below the shoulder of the westbound lanes of Interstate 80.

A ripple shot through the two-story rock formation, and it collapsed amid a small, dusty landslide. And so construction of the largest portion to date of the decades-in-the-making Deep Tunnel floodwater control system began with a bang…

When it goes online in 2015, the Thornton Composite Reservoir will hold 7.9 billion gallons of stormwater and sanitary sewer water from more than a dozen south suburban towns…

The 30-story-deep reservoir will fill like a regional bathtub during massive storms that threaten to overwhelm local sewer systems, a problem that has grown worse with more frequent and intense downpours in recent years and as development has replaced open, absorbent land with rooftops and pavement.

Dealing with flooding is not easy

DuPage County looks to consolidate more than 400 taxing bodies

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Illinois is known for its plethora of taxing bodies but a new state law gives DuPage County the power to consolidate some of these bodies:

Under the new law, the county will be able to dissolve non-elected government agencies deemed outdated or inefficient following a full analysis and public review process…

“Frequently we find there’s another unit of government that could do the same thing,” said DuPage County Board Chairman Dan Cronin, who had pushed for the legislation. “Why don’t we just figure out who is going to be the odd man out?”

The narrowly written law currently applies only to DuPage County, which has more than 400 taxing bodies. State officials say they hope DuPage will serve as a model for other counties…

Cronin said his office will analyze each entity individually to determine whether there is the potential to save money and come up with a plan for how those services would still be provided. Residents would be able to weigh in during public hearings and could put together a referendum to fight a proposed dissolution.

The article mentions a few taxing bodies that are ripe for elimination but it will get more interesting when the County Board comes across ones that people want to defend and maintain. These local taxing bodies are all about local control and being able to spend tax dollars on one’s own interests or neighborhood. Pitting this suburban value, perhaps the guiding value for many suburbanites, versus wanting to have more efficient local government presents an interesting conflict.

Plus, how many taxing bodies will be eliminated under this new law? Is this law intended to get rid of just a few taxing bodies or does it involve a significant reduction from say over 400 to 300?

Considering replacing the gas tax with a tax per mile driven or a flat fee for electric vehicles

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Here is a recap of efforts to replace the gasoline tax and the relatively less revenue collected because the federal gas tax hasn’t risen in years and the future decrease in gas consumption with more hybrids, electric cars, and fuel-efficient vehicles:

The favored answer of road engineers? Taxing by the mile driven. A handful of states — Oregon, Minnesota and Nevada — have already tested ways to use GPS and other electronics to adjust taxes. In the Nevada and Oregon tests, drivers had devices installed on their cars that sent data to special fuel pumps; those pumps automatically adjusted their fees based on how far the vehicles had driven, without revealing data that would amount to tracking drivers.

The GAO told Congress this week it should allow a similar test on electric vehicles and commercial trucks, and estimated that a pay-by-the-mile tax of 0.9 cents to 2.2 cents per mile designed to replace fuel taxes would raise a typical driver’s costs from $98 to between $108 to $248.

But it’s not the only answer to filling this financial sinkhole. Washington state lawmakers have put a flat fee of $100 a year on electric vehicles to make up for the gas taxes they don’t generate, and Oregon lawmakers may follow suit. In Virgina, Gov. Bob McDonald has proposed abolishing the gas tax entirely, replacing it with a sales tax and a new $100 fee on “alternative fuel” cars and trucks. That idea has already drawn fire from critics who point out that it would make Virginians who never drive pay for roads while letting people who travel through the state do so for free.

I’ve covered the proposals in some of these states earlier (see here) but I haven’t heard of the electric car flat fee. I imagine a flat fee will not be specific enough to target electric cars – why not just go by a reduced mile-driven rate as well to account for all of the roads being used?

I suspect the first state to institute this will encounter lots of protests. At what point can a tax like this be implemented: before taxes start to decline or only once it is really clear that gas tax revenues aren’t enough to cover road costs? A case could be made that we are already at the second scenario and need more revenue to cover federal roads.

Mortgage interest deduction part of fiscal cliff negotiations

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The negotiations regarding the fiscal cliff include the mortgage interest deduction:

Limits on a broad array of deductions could emerge in any budget deal. It is likely that any caps would be structured to aim at high-income households, and would diminish or end the mortgage tax break for many of those taxpayers…

Such a move would be fiercely opposed by the real estate industry. The industry has played a crucial role in defending the tax break, even as other countries with high homeownership have phased it out…

One of the reasons the mortgage tax break is so vulnerable is that both Democrats and Republicans have recently favored capping deductions, including both President Obama and the recent Republican presidential nominee, Mitt Romney…

Taken on it own, the deduction limit wouldn’t make a huge difference. But it can play an important role in a broad plan to cut the deficit, and shows a willingness to tackle once sacred cows. The tax numbers suggest it may not be hard to structure deduction limits in a way that leaves most middle-income households untouched.

This is not a new idea – people have been suggesting for a few years now (see here) that the mortgage interest deduction tends to help the wealthiest the most. Capping the deduction would still provide a benefit for less wealthy homeowners and boost the housing market. Yes, homebuilders and real estate people may not be able to construct and sell as many large and expensive homes that provide higher profit margins and commissions but there are plenty of other arguments against such homes beyond the mortgage interest deduction (see the green argument and the moral argument). Wealthier Americans are probably still going to buy homes, because they have the money and there is still an American cultural push toward homeownership, whether the mortgage deduction is there for them or not.

There are other countries in the world with higher rates of homeownership even with the federal government’s decades-long support of homeownership. The data is a few years old but check out these figures reported by National Association of Home Builders: a number of European countries have higher and lower rates of homeownership. Of course, American homes tend to be larger than European homes and I’m reminded of quick suggestion in Suburban Nation that Americans may have the best private realm, referring to our homes, in the world.

I assume a capped deduction would also limit or remove the deduction for the purchase of second homes?

Perhaps the biggest thing to note here is that the mortgage interest deduction was indeed was once a “sacred cow” but tough economic times lead to new measures.

 

 

How Americans use “tax talk” to assert their own status

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In a timely follow-up to an earlier post, a sociologist further explains a study about “tax talk” in America:

Our findings highlight how people can use tax talk as a way of asserting what sociologist Herbert Blumer called “a sense of group position.” That is, tax talk can be a symbolic way for people to proclaim their righteousness in contrast to those they believe are less deserving. Thus, our interviews were filled with abstract descriptions of people our respondents felt unjustly benefited from federal tax policies…

The importance of our findings is in how people brought these economic issues to life in everyday discourse. In ordinary talk these matters are not really about balancing budgets and encouraging growth. They are about a moral sense of right and wrong. They are about asserting one’s belief about who should and should not be rewarded by the policies of the federal government, and it’s worth noting here that even though we attempted to engage people in talk about all forms of taxation, people generally only wanted to talk about federal income tax.

Ultimately, our respondents’ discursive use of the income tax – as a symbol of a morally illegitimate, exploitive relationship between hard-working middle-class people, and the rich and poor who exploit them – helps to illuminate why tax talk occupies such a central place in American political discourse. Among other things, it helps to illuminate what American conservatives talk about when they talk about taxes.

Fiscal debates are about more than money; they are also about the meanings people attribute to how that money is collected in the first place. The Tea Party is a vivid example. Although the rhetoric of the Tea Party concerns taxes, this is not the main policy concern of the movement. Instead, Tea Party activists use anti-tax rhetoric to position themselves symbolically as a righteous group burdened by policies they believe only benefit the rich and the poor.

This sounds like boundary making, to put it into terms used in the sociology of culture. One way groups can differentiate between themselves is to draw strong symbolic and moral boundaries. In this case, paying taxes is seen as this moral boundary. Hard-working Americans pay their “fair share” while those above and below them find ways to shirk their civic duty. This is a clear value judgment that is then used to back or undergird political action.

Given the current political situation, we need a follow-up study that then looks at how taxes are talked about in social groups beyond this limited sample. As I noted in the earlier post, this ethnographic study had a targeted sample: “24 semi-structured, open-ended interviews with white Southerners who owned or managed small businesses—a demographic group that is typically anti-taxation.” How do other Americans wield taxes as a symbolic and moral boundary in their own actions and politics? President Obama has clearly used another moral boundary, suggesting those with more income and wealth should be paying more in taxes. This is a different kind of “fair share” but it might also give these higher-income Americans their own moral boost.

Time magazine cover: “One Nation on Welfare. Living Your Life on the Dole”

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This is an interesting cover story amidst the current election cycle and arguments about how much the government should be involved in day to day life: much of our current lives are already subsidized by the government.

Three things to note:

1. This story plays with what we mean by “welfare.” While there is a particular set of policies this typically refers to, the definition is expanded here.

2. While the two parties try to cast the other side as being on extreme, both parties want some government involvement. Democrats don’t want all of life run by the government just as Republicans don’t want no government involvement whatsoever. We’re talking about differences in degrees though this often gets cast as two different ideological poles.

3. I’m not sure Grunwald plays enough with the idea that while Americans may be okay with government funding certain things, they also tend to like local control over certain matters. In this sense, it is not just government vs. no government; it is “big government” in Washington versus “local government” represented by a local school board, park district, or municipality. The levels of government are important in this discussion as residents who pay taxes often want to feel like they still have some control over their tax dollars.

Abundance in DuPage County: 45 mosquito abatement agencies

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Illinois is well-known for having many government units. The Chicago Tribune makes this point by talking about fighting mosquitos in DuPage County:

DuPage has 45 separate entities — special districts, townships, municipalities — providing mosquito abatement services, Of those, 36 have signed separate contracts with the same vendor for the bug spray they use to keep the mosquito population down. If they pooled their buying power, no doubt they could get a better deal.

Here’s the worst part: Spraying for skeeters has little lasting impact. The anti-bug mission could be carried out much more cheaply and efficiently under the county Health Department. The citizens of DuPage don’t need any other mosquito abatement agencies, let alone 45.

So why do all these governments cling to this dubious mission? “They’re very protective of their turf,” DuPage County Board Chairman Dan Cronin tells us…

Unfortunately, it’s the same story across the state of Illinois — which has 7,000 school districts, townships, library boards, fire-protection districts and other government units, generally with separate oversight and taxing authority. The Census Bureau says that’s far more than the total in any other state.

This is not a new story in Illinois and across many places in the United States. Americans like having local control over all sorts of things and this can get in the way of regional cooperation. Intriguingly, the argument made in other parts of this editorial is that taxpayers could save money if communities would consolidate some of these separate bodies and have better purchasing power. Is this an argument more likely to be made in tougher economic times?

One thought came to me when reading this: is the presence of more taxing bodies tied to political conservatism? DuPage County is well-known for its political conservatism and presumably, local communities like having this many taxing bodies as it allows people to have more direct input rather than handing off tasks to larger, bureaucratic bodies. Perhaps the political leanings of a community have little impact on this and it is more about a historical legacy (could be something in Illinois that came out of a state/county/township/municipality system) or specific system of government.

Digging into the moral reasons the American middle-class doesn’t like paying taxes

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A new sociology study looks at the moral opposition middle-class Americans have to taxes. Here are some of the main findings:

“In this study, we demonstrate how people associate the income tax with a violation of the moral principle that hard work should be rewarded,” he added. “Our research has implications for how policymakers should frame fiscal issues. Because people intertwine fiscal issues with morality, approaches to tax policy that only emphasize economic benefits for the working and middle classes do not resonate with everyday understandings about what taxes mean to people.”…

Interview respondents saw themselves as morally deserving and hard-working people, whereas they perceived a tax structure that benefits the idle poor and the idle rich…

Respondents frequently associated their earliest memories of taxation with their first jobs, or wage labor, which in turn was associated with the absence of personal autonomy and dignity, or the ability to control one’s own time and work…

Hard work was viewed as a virtue, and respondents didn’t like idea of being taxed while they work, instead speaking in favor of a flat tax on consumption. “Tax whatever,” one respondent told the researchers. “Don’t take my paycheck.”

A note: the study is limited to a particular sector of the American public. Here is the study group: “24 semi-structured, open-ended interviews with white Southerners who owned or managed small businesses—a demographic group that is typically anti-taxation.” This study has a small N and a targeted group so this limits its generalizability but its value seems to be in hearing how people talk about and understand taxes.

This is another reminder that money is not typically exchanged in solely neutral economic transactions: there is a lot of social and moral weight in economic transactions. Thus, when talking about taxes, policy makers and citizens are making moral arguments in addition to straight-up financial arguments. This applies to some of the current budget debates in the United States: the two sides may be talking some about fiscal issues but there are also underlying moral issues about how money should be used, how it should be acquired, and more broadly, how social life should work.

 

DuPage County Forest Preserve continues aggressive land acquisition

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The Daily Herald reports that the DuPage County Forest Preserve continues to purchase more land:

Five years after voters approved a $68 million tax increase so the DuPage County Forest Preserve could buy more land, officials report they have acquired 43 properties and more than 473 acres so far.

The biggest purchase came three years ago of 94 acres for $12.3 million to protect a unique wetland near Bartlett, Kevin Stough, director of land preservation, said in a recent report to forest preserve commissioners…

“The timing has worked for us, since land prices started dropping in 2007 and have gone down more steeply in recent years,” he said. “So that’s something where we have been very fortunate.”

In total, the district has purchased 143 acres of floodplains, 124 acres of wetland and the remaining 206 acres are primarily forested areas, all accessible to the public. And Stough said the forest preserve still has money left to purchase more land.

I’ve noted before that the DuPage County Forest Preserve has been quite aggressive over the decades. This is how much land the Forest Preserve controls:

The District owns or manages over 25,000 acres of land at over 60 forest preserves, about 12 percent of the total land in DuPage County. As a result, every home and business in DuPage County is no more than ten minutes from a forest preserve.

Within these 25,000 acres are 60 forest preserves, 600 acres of lakes, 47 miles of rivers and streams, and over 145 miles of trails. Some forest preserves are jointly owned, and some are the site of nature centers or amenities operated by other agencies.

That is a lot of preserved land within a county that experienced a lot of population pressure after World War II and today has little open land for development.

I would love to see figures about what DuPage County residents think of the Forest Preserve. The Forest Preserve suggests its land is quite popular:

Each year, 3.4 million visitors enjoy the county’s 60 forest preserves. Additionally, over 100,000 visitors participate annually in educational and cultural programs at the Forest Preserve District’s five education centers.

How do County residents see the trade-off between paying higher taxes versus having the Forest Preserve land to enjoy? Is there anyone who thinks that putting this much land off-limits to development raises housing prices? How important is open space to County residents versus other concerns?

 

Migration after a “millionaire’s tax”

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A number of states are considering raising taxes for wealthy residents and some have argued that such taxes push wealthy people to move to another state. Here is a brief summary of some research on what happened in New Jersey after a millionaire’s tax was implemented in 2004:

A 2004 “millionaire’s tax” in New Jersey had little effect on migration, according to a study by Stanford University sociologist Cristobal Young and Princeton University sociologist Charles Varner published this year in the National Tax Journal. Moving from California to escape taxes is even more difficult.

“Many people in New Jersey could move 30 or 40 miles and find themselves in lower-tax Connecticut or Pennsylvania,” Young said in an email. “If you are in the Bay Area, it is a 500- to 700-mile move to competing urban areas such as Las Vegas or Phoenix. That is a tough move – you will be starting a new life.”

The New Jersey Department of the Treasury issued its own research in October that countered the Young-Varner study. The department is led by an appointee of Republican Gov. Chris Christie, a vocal opponent of a new “millionaire’s tax.”

In a state with 8.7 million residents, the department said that all tax increases – not just those on the wealthy – resulted in 20,000 fewer taxpayers.

So it sounds like both research studies could be right? Though I haven’t read either study, the loss of 20,000 taxpayers from New Jersey doesn’t sound like much. Additionally, there are a lot of reasons people could move and taxes are just one part of the larger business climate and cultural setting. Without clear trends in the data or interviews or surveys with people who leave, it would be hard to know that taxes were what pushed people out of the state.

The argument that it might be more difficult to move out of California because of greater geographic isolation is intriguing. I would think that distance matters less than other characteristics that draw people to California such as the weather and exciting cities. If geographic isolation is a key factor, we would see more movement in metropolitan areas that straddle states, such as New York City or Chicago where residents who want to protest or move because of taxes could live over the border in Indiana or Wisconsin and still be part of the region.

When states consider higher taxes for millionaires, why haven’t more millionaires acted like corporations who then threaten to leave and force tax breaks? Would it be too easy to vilify individual wealthy residents?

In the end, I wonder about the validity of arguments that people move solely in response to tax rates.