Tag Archives: taxes

The American Dream Act

So there is a voters initiative going around in Arizona, called the American Dream Act.  This act would remove property taxes off of any citizen over the age of 65.  On the face of it, you may be willing to support this effort, as I was, but after just a little thought about it, it is clear that this must be defeated.  Being a Realtor, I have a high degree of interest and knowledge in this subject.

First we must look at how property tax is calculated in Arizona.  First the county accessor figures out how much every property in that county is worth.  It can only go up at a small rate each year, so properties that have not changed hands in a long time are valued much less than they should be.  The amount the county says a property is worth is the Full Cash Value, then we have the Limited Property Value.  The property can go up any amount but the LPV can only go up 5% per year.  So in the last 8 years most property has gone up much more than 5% per year, but the LPV is a benefit for people who still own the same house.  The LPV gets reset to the FCV when the property is sold.  On an owner occupied single family residence the tax is based on 10% of the LPV Value this is called the assessed LPV.   Most commercial buildings are assessed at 18% of the LPV Value.  Empty land and investment property is 15%, Senior living centers are also 15%.  Schools and churches are even 15% though churches can apply to be exempt. 

So if you are a taxing body you send the amount you need to raise to the assessor’s office.  They then add up the Assessed LPV of all the properties in your jurisdiction and divide that by the amount you need to raise, and those properties are assessed that amount.  So lets say you are school district, you need $10 million to run your school.  Your district has $2 billion in Assessed LPV then that would mean for each $100 in Assessed property value a property has they will have a property tax obligation of 50 cents.  So if the home in that district is worth $200,000 and has an LPV of $120,000, then an assessed LPV of $12,000 that person will owe $60 to that school district.   Then we have layers and layers of different taxing bodies, each with different borders and different amounts.  This is a large task, mostly done by computers now, but after figuring out everything a bill is sent out for each property with a list of each taxing body they are paying tax to and how much.  All of this data is public record for every property.     For example a home in Sun City that is worth $173k has an assessed LPV of $10,376.  They have a tax obligation to three taxing districts, $102 to pay for Maricopa County Community Colleges, $342 to pay for Fire service in Sun City, and $70 to pay for Street Lighting improvements.  This is only $5 per $100 in Assessed LPV.

So lets say we make all senior citizen property owners tax exempt then they won’t pay these taxes any longer, BUT they still we be paid, the assessor will just have the remaining properties pay a higher amount.  So lets say this bill passed, and in sun city about 70% of the properties are owned by someone over the age of 65.  The rest are churches, businesses, property that is rented and such.  So in order for those 70% to pay nothing the rest must pay over 3 times as much as they are paying now because the tax base has shrunk. 

Imagine you are a business in Sun City, you already are assessed at 18% instead of 10% on the value of your property, but now that amount will go way up due to a smaller base.  If you own a building worth $500,000 which would be a small business, you already are paying on an assessed LPV of $90,000, about 9 times as much as the average home. If we use the same amount of $5 per 100 in LPV we would expect a tax of $4,500 for this small business per year.  If the base is shrunk by 70% this business will see a tax INCREASE of OVER $10,000 to over $15,000 per year.  This sort of thing can make the difference of that business staying in business or failing. 

Imagine you are renter in Sun City, you live in a nice home, or senior living and you rent from a landlord.  This property is also not exempt.  You may not directly pay property tax, but it is part of your rent, and if it goes up your landlord will surly pass it on to you eventually.  Lets say it is an average house with a $700 a year tax obligation, and lets say that 70% of the property value in sun city becomes non taxable, your new tax is over $2300 per year, about $135 more per month.   Let’s think about who rents, usually these are the most fragile, and poorest among us, the people who can least afford a tax increase. 

Because this new law is not means tested that means you will get the benefit no matter how much you make or are worth, but a renter, or someone who is just out of college struggling to pay their bills, or that small business will pay for your benefit.  You lived a good life, you are reaping the rewards of home ownership and now you want more benefits on the backs of those that can least afford it. 

If you are for this still for this, and your reasoning is that taxes are bad and that taxes are theft, I am with you.  But this will just shift the taxes to people who have a hard time already.  Furthermore, the senior population is with us on this cause to lower taxes, and once their taxes are gone they will no longer care about lowering property taxes, this will lead to even higher taxes.

If you are still for this because it will put money in your pocket, have a heart and care about the rest of the population, you had a good life, you own a home, you are ahead of most people, the generation that is coming up has it much harder than you had it.  

Luckily for me I live in Peoria, where the senior population is much lower than sun city, but if this was to pass it would still be a fairly large impact because I own a business also that pays a lot in property taxes but I have never minded them because I see where the money goes and those are things that I support.  But I don’t want to pay more than my fair share. 

When the Founders said “democracy is two wolves and a sheep deciding what’s for dinner” this is EXACTLY what they had in mind.

So I implore you to not sign petitions for this, and if it makes it on the ballot vote against it.   Unless of course you only care about yourself and are greedy then do what you want.  

Is it ok to steal?

I own a computer store.  It is fairly small and not so profitable recently.  In fact as our products have turned into a commodity it is very hard to make money any longer.  But there are other places that sell computers, CostCo, Dell, Best Buy. These companies are big, they make tons of money and are very rich.  They have tons of extra inventory just sitting there on their shelves.  Now if I went out and decided to take some of that inventory from their store and put it on my shelves, it would help my employees keep their jobs, it would help my store make more money this month and it would be totally illegal and immoral.  It is there stuff, I have no right to it.

But this is exactly what our government does but on a much grander scale.  In fact if you are the big store, and you don’t them steal from you Joe Biden calls you unPatriotic.  Yea if you are one of the people who will benifit from this plan I can see how you may support the Obama/Biden plan of taking more from the people who really make this economy work and giving it to the people who are middle class, or even those who choose not to work.

If you have any ethics you must see that this is simply another form of theft, the problem is that we have lived with it for about 63 years and people have become so used to it that they have become dependant on it.  If you make more than 120k per you, or maybe even less you should expect your taxes to quickly go up.  Obama says 250k in many speaches, 200k during his infomercial, and biden said 150k a few times last week, but now other written items from they say 120k.  Once he takes office, if he wins, I think it will quick drop to 100k or 75k.

On a side note Bush made some tempoary tax cuts that were fairly large and they expire in 2010.  When Obama says that he will not raise taxes to the middle and lower class he simply means that he will not add any new taxes BUT he is fully intending for the Bush tax cuts to be allowed to expire, in effect raising taxes, but HE did not do it….it has long been set in motion.   This slick concept is not caught by most people.

Social Security is the worst kind of theft.  It is a huge program that simply will NOT keep working much longer.  Basically you have a shrinking group of hard working young people who are mostly working pay check to pay check hardly getting by.  Then you have a growning group of older people who have had 40 years of high income earning, they mostly own a house and they have on average 10 times the assests of the first group.  Who should give who money.   Well, you guessed it, our government has it backwards, the hard working poorer working people give their money to the retired people who sit around and lead a life of leasure for the most part.  The worst part is that they feel entitled to this life because that is what they have been told for decades, it is illogical and is the main cause to our problems but there is little that can be done to fix it.

Drill Drill Drill

As you may have guessed this blog is going to be about Oil.  There is so much debate now about oil.  By far the price of oil and the worrys it has caused in the economy is the most important issue to the population of the US.  Over 70% of Americans think that we should drill as much as we can.

But most of the democrats are against this position.  They simply have to be against it because some of their biggest supporters are the radical environmentalists.  They know that this group is very vocal and will cause them problems.  But they also know that 70% of Americans see that the high price of Oil is killing our economy.  Every nation out there that has oil is drilling and sucking the oil out of the ground as fast as they can EXCEPT the United States.  Our leaders how bowed to the environmental lobby and for about three decades now have made it hard to drill oil and almost impossible to build a new place to refine it into gas.

The solution is to drill for oil.  We already know where massive amount of oil is.  There is enough oil off the coast of Santa Barbra, Ca to eliminate our importation of foreign oil for 10 years.  There is enough oil in Utah and Colorado in the form of oil shale that we could be a global exporter for decades.  There is enough oil in Alaska to run the US for the next Century.  But there is a ban on drilling off shore, so the CA oil is out.  And Oil shale takes 8-10 years to get government permits to even explore and then you have to start the process all over again to actually get the oil, so no major companies are even trying.  And we all know that the democrats won’t let anyone drill in Alaska.

We have the means to get out of this oil crisis very fast.  We have the capacity ready to go.  The oil companies are eager to drill, so investment is not a problem. 70% of the people want to drill now for more old.  The only problem is our leadership.  The good thing about that is that I think that most people understand this and this November we get the chance to change our leadership.  Anyone who stands to block more drilling will have a hard time being elected.

The democrats think that this problem can be solved ONLY by saving oil, and becoming more efficient.  That is a big part of it BUT it will not change prices enough in a short enough time to save the economy.  We need to do both save oil and get more.

So where do the presidential candidates stand on this issue?

Obama stands for slashing Carbon Emissions by 80%, no matter the cost to the economy.  He is for investing more in biofuels cause the price of foot to go up even more.  He wants to cap the amount of oil our nation can import, and he wants to not allow any more drilling.  This will cost our government much more for everything, and he wants to spent hundreds of billions on doing this.  This means that everyone will have to pay by having  much higher taxes.  Higher taxes, higher fuel costs, higher food costs, that is what Obama stands for.  Check it out for yourself at his site, CLICK HERE.

McCain stands for expanding domestic oil and natural gas exploration AND production.  He is also for investing in clean energy, promoting energy efficiency and protecting our environment.  He is for nuclear power, which is clean and has no carbon.  Click here for all of his views.

So when you go vote, remember you are voting for the future of our economy.  It is the number one issue that people are interested in but the media is hardly talking about the truth of what candidates are talking about.  They gloss it over with all this other talk, but it is easy for you to see just by looking at their official sites yourself.

There is one quote that I keep hearing Obama Saying that drilling for oil will not produce oil today.  He is implying that it will not fix the problem and he uses that to say the whole idea of drilling dumb.  Everyone knows that you have to drill and invest now to to get a benefit later.  It is like having a kid, it is not instant, and everyone knows that.  Obama’s speech on this just shows everyone how dumb he thinks most Americans are, and how easily fooled they can be.   I just hope he is not right, but I have lost many times before betting that Americans are smart.

Drilling for Oil, WILL have a fast effect on prices.  10 days again bush talked about drilling more and asked congress to act on this and remove all limits to off shore drilling.  After saying that the price of OIL has dropped by over 12%, almost $20.  If we actually passed this change it would drop by more, and as soon as we did the oil companies would drill drill drill and the price would be below $2 at the pump within 5 years, below $3 in a few months.

Freedom in the modern age.

Well I have never talked on here about entertainment before but here is one that is good.  If you do or do not know there was a show called Jericho.  Last night was the last episode of it.  It was a really great, well written show.  It lost some people because for a while it went a bit slow, and most shows with arc don’t last once you miss a episode or too and the network changed it’s time slot at a very critical time in the development of the show.  (Arc is when a show is a story from one episode to the next so you have to watch them in order to understand fully what is going on.)  Basically they did not give it the chance they should have and it failed.   It was canceled after the first season, but the largest fan outcry in TV history made them bring it back.  They did so with little advertising and fanfare, and had a second season of only 7 episodes that mostly concluded the entire story.

The reason this show was special is because it touched on subject that are almost never talked about on TV in this way.  Maybe it made some of the corporate people unhappy with the direction it was going.


Basically the story goes like this.  There are bombs that go off and destroy the 23 largest cities in the US except New York.  Communication and power stop.  Food runs out and people in rural Kansas start fighting to survive.  Well equipped mercenaries raid towns and take all the resources and kill many people.  At some point a goverment is put in place.  The old US has the east, TX is independent and the west forms a new nation.  The nation formed in the west is totally controled and financed by a huge mega corporation, the same one that ran the war in Iraq for the US and hired all the mercanires that the US used worldwide before the attack.  The corporation quickly takes part of everything.  They take away freedom, they surround each town with checkpoints so that only products that say can get in or out.  They rush a new constitution that takes away all the power of the people and gives it to the corporation.  Everything is unfair but they have all the resources and power.  Soon the people start to revolt, and by the end of the show all the viewers are calling for revolution.  The last episode is the start of this revolution with Texas shooting down airplanes from this new western nation.

Much of the show focused on the trap of giving corporations too much control of the government, which in turn takes rights away from the people.  This is something that is happening right now in the United States.  There are so many ways that our freedom has been taken.  The government is fairly corrupt.  They spend way too much, and take way too much.  They also spend so much more than they take in.   Who said the federal goverment should secure travel?  Who said they should put so much control on what we eat?  Who said that the government should run the school system in such a poor way?  We tax people so unevenly but yet the government mails out billions of dollars in checks.  The show Jericho showed how this line of thinking will only result in loss of freedom, and at some point the people will revolt.

If you told anyone 20 years ago the things that are going on in this nation right now they would have said you are crazy, that could never happen.  That is way overstepping the role of government.  I guess they are doing it just slow enough that most people don’t notice.   The education system has failed the public by creating the dumbest population this nation has ever had.

People in our nation now expect to carry ID everywhere, go through government checkpoints to travel.  It took me over a year to have our federal government allow my wife to enter the nation, they have no right to say who I can and can’t marry.  People expect to give a personal ID number every time they talk business on the phone.  People expect their information, privacy, and rights to be disrespected.   Most of them are so miseducated that they simply believe what they are told by the media, they have no idea how to think for themselves.

If it goes much farther down this path I will really start to fear for the future success of my country, the United States of America.  Most of the nation and the decisions are totally out of the control of the people, and most of the people disagree with many of the decisions.  Most people think we are not to be the world police, they think we spend way too much and should not carry debt.  Everyone I know thinks the tax system is crazy and needs to be replaced, but yet every year it gets more complex.  When will the craziness end.   Maybe only with revolution.