State questions, November 6th, 2012

[nathanm]

Anyone want to toss in thoughts?  I'd love to hear some input.

You asked:

758: Complete insanity. We only need look to California to see what pain property tax caps will bring us. At least they have a decent excuse. We don't have quickly-growing valuations that make property taxes unaffordable for retirees. We already have a reasonable cap. Is there a wave of people having to sell their homes due to property tax? If so, I haven't seen it.

759: I think an outright ban on affirmative action is silly. While I'm not sure that it's appropriate at the present time, it's not outside the realm of possibility that it will be needed again in the future. Banning it is just a measure to get wingers to the polls.

762: I'll probably vote for this, but I don't think it addresses the underlying problem, which is that our sentencing tends to be excessive in the first place. (we could delve deeper and find more fundamental problems with our criminal justice system, but I don't really feel like it at the moment)

764: It would be good to upgrade/replace old and failing water systems, so I can't see this as a bad thing, presuming there are rules in place to prevent individual systems from overcommitting themselves.

765: I don't even understand the point of this one yet.

766: Pure, utter stupidity. This would be a giveaway to certain large companies that aren't even based here in Oklahoma and who treat Oklahoma like a red-headed stepchild except that the legislature already gave away the farm. Moreover, why should intangible property be treated differently for tax purposes than tangible property? Say I invent a machine to do something more efficiently. Why should I be taxed less if I patent it without building it than if I do give it physical form?

[Red Arrow]

You asked:

758: Complete insanity. We only need look to California to see what pain property tax caps will bring us. At least they have a decent excuse. We don't have quickly-growing valuations that make property taxes unaffordable for retirees. We already have a reasonable cap. Is there a wave of people having to sell their homes due to property tax? If so, I haven't seen it.

You are obviously not near retirement age.  If our valuations are not growing quickly enough to make property taxes unaffordable, there will be no difference.  If they do start growing at absurd rates, it will protect people like my mother from losing her home.  The question states that the 3% cap would apply to homestead exempted property and agricultural land.  It would not appear to apply to commercial property, including rental housing.

759: I think an outright ban on affirmative action is silly. While I'm not sure that it's appropriate at the present time, it's not outside the realm of possibility that it will be needed again in the future. Banning it is just a measure to get wingers to the polls.

Read the question.  The measure still permits affirmative action in three instances.

762: I'll probably vote for this, but I don't think it addresses the underlying problem, which is that our sentencing tends to be excessive in the first place. (we could delve deeper and find more fundamental problems with our criminal justice system, but I don't really feel like it at the moment)

It is reasonable to take the governor (and future governors) out of the process for non-violent crimes.

764: It would be good to upgrade/replace old and failing water systems, so I can't see this as a bad thing, presuming there are rules in place to prevent individual systems from overcommitting themselves.

I believe I read the purpose of this is to allow smaller towns/cities access to affordable money to maintain and improve water and sewage systems.  Probably a good measure.

765: I don't even understand the point of this one yet.

Same here.  I need to find some more info.

766: Pure, utter stupidity. This would be a giveaway to certain large companies that aren't even based here in Oklahoma and who treat Oklahoma like a red-headed stepchild except that the legislature already gave away the farm. Moreover, why should intangible property be treated differently for tax purposes than tangible property? Say I invent a machine to do something more efficiently. Why should I be taxed less if I patent it without building it than if I do give it physical form?

Whoa, blatant disagreement on this one.  The intent of the tax on intangible property may be to punish big companies but potential implications can reach many of us, unless you have access to some magic information that says otherwise.  That the items below are not often presently taxed is a matter of state vs. localities and time.

Patents:  If you don't build something, how much should you be taxed?  Inventions, formulas, designs, and trade secrets which are being used generate income will incur income tax.

Licenses:  My Professional Engineering license is already nothing more than a tax.  I pay income tax on the salary that is the result of the benefit of having that license.  You want more?  What licenses will be taxed.  Real Estate licenses?  Driver's licenses?  Commercial Driver's licenses?  Please link to a list of what will not be taxed.

Insurance policies:  I have a small life insurance policy that will take care of my final arrangements when the time comes.  Taxing that would be like taxing the principal in my savings account.  Where does it end?  Will automobile insurance policies be taxed.  Will home owner's insurance policies be taxed?  If not, please link to where they will be exempted.

Custom software:  I think this may affect either you, your customers or both.  I think this should be the most heavily taxed intangible property of all.  

Trademarks etc: If they are successful, they already generate income which is already taxed.  If they are not successful, what are they worth?  Who decides?


Link to state questions:
http://www.ok.gov/elections/documents/Oklahoma%20State%20Questions%202012.pdf

[nathanm]

You are obviously not near retirement age.  If our valuations are not growing quickly enough to make property taxes unaffordable, there will be no difference.  If they do start growing at absurd rates, it will protect people like my mother from losing her home.  The question states that the 3% cap would apply to homestead exempted property and agricultural land.  It would not appear to apply to commercial property, including rental housing.

We already have a 5% cap. Nor do we have the problems that other states have with bubbly housing prices. Further restricting ourselves with a constitutional amendment makes no sense to me.

Whoa, blatant disagreement on this one.  The intent of the tax on intangible property may be to punish big companies but potential implications can reach many of us, unless you have access to some magic information that says otherwise.  

The magic information is current law. Fixing a non-problem on behalf of at&t because they manage to find some scare tactic doesn't seem appropriate to me.

Patents:  If you don't build something, how much should you be taxed?  Inventions, formulas, designs, and trade secrets which are being used generate income will incur income tax.

Like anything else, it has a value. Same as the gadget I build instead of draw and patent.

..scaremongering snipped..

Custom software:  I think this may affect either you, your customers or both.  I think this should be the most heavily taxed intangible property of all.  

Trademarks etc: If they are successful, they already generate income which is already taxed.  If they are not successful, what are they worth?  Who decides?

No, the income is taxed. Why should a valuable mark escape taxation when physical property does not? It doesn't matter whether your physical property makes money, you still pay property tax. What is the purpose of treating one class differently than the other? As far as software goes, please tax it. If I write software for someone, that's no different than building them a machine. It should be taxed identically, IMO. Regarding valuation, it's no harder than valuation of physical property or anything else. It's hard to determine appropriate valuation for a lot of real estate, for crying out loud. If this is to be the standard, we may as well give up on taxation entirely.

Again, the rate is presently $25 a year for all your intangible property and you get an offsetting tax credit. The practical effect is zero, while the effect of passing the amendment constrains future policy unnecessarily. We're pretty good at electing anti-taxers here in Oklahoma, so I'm not too worried that we'll go overboard on this. If we do, we can always pass an amendment at that time.

As far as 759 goes, it's only short of a total ban where federal law requires it to be. Whatever you think of the policy, it can be adequately handled with legislation.

[nathanm]

Another thought on 758. If it were about keeping retirees from being kicked out of their homes, it would only apply to retirees and the index would be the Social Security COLA, not an arbitrary 3%. That it isn't makes it plain to me that it's actually about reducing funding for schools and municipalities through the back door. And if it fails to restrain spending, it shifts the revenue to the sales tax, which shifts the burden disproportionately onto the poor and ends up not actually helping retirees that much overall and actively hurting retirees who don't own a home.

So yeah, I could support the purported intent, but I can't support this measure.

[Red Arrow]

Another thought on 758. If it were about keeping retirees from being kicked out of their homes, it would only apply to retirees and the index would be the Social Security COLA, not an arbitrary 3%. That it isn't makes it plain to me that it's actually about reducing funding for schools and municipalities through the back door. And if it fails to restrain spending, it shifts the revenue to the sales tax, which shifts the burden disproportionately onto the poor and ends up not actually helping retirees that much overall and actively hurting retirees who don't own a home.

So yeah, I could support the purported intent, but I can't support this measure.

I could go along with a general cap of 5% or an index of average income for everyone, whichever is less.

[Red Arrow]

Again, the rate is presently $25 a year for all your intangible property and you get an offsetting tax credit. The practical effect is zero, while the effect of passing the amendment constrains future policy unnecessarily. We're pretty good at electing anti-taxers here in Oklahoma, so I'm not too worried that we'll go overboard on this. If we do, we can always pass an amendment at that time.

http://stateimpact.npr.org/oklahoma/tag/sq-766/

About 1/2 way down the page:

ENTER THE STATE QUESTION
The business activity fee was never meant to be a permanent solution. In 2012, State Sen. Mike Mazzei and Rep. David Dank, both Republicans, proposed SJR 52, the framework for SQ 766. If SQ 766 passes, the business activity fee will expire. But if it fails, the business activity fee will continue in leu of intangible property taxes, though county assessors will have the clear authority to impose them unless the legislature takes some other action.

[nathanm]

I could go along with a general cap of 5% or an index of average income for everyone, whichever is less.

That would be reasonable enough that I wouldn't grumble too much. My only concern in that situation is if inflation runs well beyond that point for a period of years and catch ups are made impossible by the income index once inflation returns to normal. I think I could actively support a measure that applied only to retirees, only to the first x (based on average home price in the county/metro/whatever) of value, and indexed directly to SS COLA.

I think that to some degree it hurts everyone when the housing market becomes less liquid due to people not wanting to move because of property tax caps. It's the same reason I wouldn't support rent control if I lived in NYC, actually. Just as a matter of fundamental fairness, I don't think it's reasonable that somebody who buys an equivalently valued house down the street should pay more property tax than I do just because they moved in later. That said, I agree that it is a problem when retirees can't afford the property taxes on their home.

Perhaps instead of capping the assessed value itself, we could cap what retirees can be required to pay in any given year and the unpaid portion could be collected without penalty upon sale/transfer of the property, presuming there's any money left over after paying outstanding mortgage(s) and selling costs.

[Red Arrow]

That would be reasonable enough that I wouldn't grumble too much. My only concern in that situation is if inflation runs well beyond that point for a period of years and catch ups are made impossible by the income index once inflation returns to normal.

So you have no problem with working people losing their home to inflation and the subsequent taxes if their income doesn't keep up?  I would have thought you would be in favor of indexing a person's tax to their income and ability to pay rather than the price of a bubble they may not make it through.  Inflation returning to "normal" generally does not mean a lowering of prices as much as it does a slower increase in prices. Someone who didn't keep up with inflation will probably never catch up without some kind of special circumstance.

I think that to some degree it hurts everyone when the housing market becomes less liquid due to people not wanting to move because of property tax caps. It's the same reason I wouldn't support rent control if I lived in NYC, actually. Just as a matter of fundamental fairness, I don't think it's reasonable that somebody who buys an equivalently valued house down the street should pay more property tax than I do just because they moved in later.

I see housing as a place to live more than as a revenue generator.  Someone who moves in down the street from you and pays an inflated price compared to what you paid can afford to pay a higher tax.  It's part of buying a more expensive house.  I am surprised at your stand considering your previous posts regarding income, payroll taxes and the ability to pay.   I expect we will disagree on the following:  To me, a house is not worth any more than you paid for it unless you use the increased value for something like a 2nd mortgage until you sell it.

Perhaps instead of capping the assessed value itself, we could cap what retirees can be required to pay in any given year and the unpaid portion could be collected without penalty upon sale/transfer of the property, presuming there's any money left over after paying outstanding mortgage(s) and selling costs.

I could go along with capital gains (if there are any) tax on the sale/transfer price of a final home but retroactive taxes I cannot agree to. 

[Red Arrow]

The magic information is current law. Fixing a non-problem on behalf of at&t because they manage to find some scare tactic doesn't seem appropriate to me.

I think we can thank AT&T for turning a non-problem into a problem.

[Red Arrow]

No, the income is taxed.

Yep, that is what I wrote.  That is enough for me.

[nathanm]

So you have no problem with working people losing their home to inflation and the subsequent taxes if their income doesn't keep up?  I would have thought you would be in favor of indexing a person's tax to their income and ability to pay rather than the price of a bubble they may not make it through.

In a liquid market, they can sell the house and move into a cheaper one or rent. Nobody forces homeownership on people. I make an exception to the rule for retirees because they often have more high fixed expenses eating up a relatively small retirement benefit and, TBH, because the benefit can't go on nearly as long, so it distorts the market less. Capping property tax on all homestead properties ends up shifting the tax burden onto renters, who are disproportionately young and poor.

Someone who moves in down the street from you and pays an inflated price compared to what you paid can afford to pay a higher tax.  It's part of buying a more expensive house.

That's not necessarily true. In an environment where inflation is higher than the cap, that house which is more expensive in nominal dollars may well be the same price in real dollars. I agree that owner-occupied housing isn't "supposed" to bring in income, but keeping the market liquid is of benefit to homeowners. Illiquid markets make it hard to accurately price assets and make it difficult to sell (or buy) when you need to. We live in an age where people move around a lot and change jobs many times in their lives. Having them tied down to a particular house because of the property tax benefits they won't get if they move is economically inefficient.

I could go along with capital gains (if there are any) tax on the sale/transfer price of a final home but retroactive taxes I cannot agree to. 

Not retroactive, deferred until the sale to avoid turning retirees out on the street because of unrealized gains. There are by definition no (federal) capital gains owed on an inherited house if the house doesn't appreciate in value between the time its owner dies and the time it is sold by the heir. The cost basis steps up to market value on the day the owner dies.

[nathanm]

I think we can thank AT&T for turning a non-problem into a problem.

I'm not sure why a database containing maps should be less subject to tax than a filing cabinet full of maps. Or why an IVR system that I build for somebody that runs on a computer shouldn't be taxed while an IVR system that you buy as part of a PBX should be.

Intangible property is often called intellectual property by its owners and they act like it should be their property in perpetuity, and the legal framework mostly supports them in that. If they get property rights in it, why should it not be taxed like any other property? Calling licenses and franchises property isn't something I've heard before, but perhaps one of our resident attorneys can tell us whether they are indeed legally considered property.

Is there anything stopping the legislature from exempting anything they like from property tax? If not, why didn't they just pass that law instead of trying to put something in the Constitution?

[Red Arrow]

In a liquid market, they can sell the house and move into a cheaper one or rent.

I don't believe someone should be forced to make that move.

That's not necessarily true. In an environment where inflation is higher than the cap, that house which is more expensive in nominal dollars may well be the same price in real dollars. I agree that owner-occupied housing isn't "supposed" to bring in income, but keeping the market liquid is of benefit to homeowners. Illiquid markets make it hard to accurately price assets and make it difficult to sell (or buy) when you need to. We live in an age where people move around a lot and change jobs many times in their lives. Having them tied down to a particular house because of the property tax benefits they won't get if they move is economically inefficient.

Your "liquid market" leads to housing price bubbles.

Not retroactive, deferred until the sale to avoid turning retirees out on the street because of unrealized gains. There are by definition no (federal) capital gains owed on an inherited house if the house doesn't appreciate in value between the time its owner dies and the time it is sold by the heir. The cost basis steps up to market value on the day the owner dies.

You are wanting to tax unrealized gains by your plan.

[Red Arrow]

I'm not sure why a database containing maps should be less subject to tax than a filing cabinet full of maps. Or why an IVR system that I build for somebody that runs on a computer shouldn't be taxed while an IVR system that you buy as part of a PBX should be.

I think neither should be taxed on an annual or other periodic basis.

Calling licenses and franchises property isn't something I've heard before, but perhaps one of our resident attorneys can tell us whether they are indeed legally considered property.

You are claiming scare tactics.  I claim head in the sand tactics.  Funding schools is another issue.

Is there anything stopping the legislature from exempting anything they like from property tax? If not, why didn't they just pass that law instead of trying to put something in the Constitution?

It probably has to do with Oklahoma's populist origins.

[Townsend]

Oklahoma State Question 759 would limit affirmative action


http://www.kjrh.com/dpp/news/local_news/Oklahoma-State-Question-SQ-759-would-limit-affirmative-action-SQ759

TULSA - In its long history, the state capitol has seen plenty of political battles but few more intense than the fight over affirmative action, and whether it should play a role in who works at the capitol.

"We passed affirmative action a long time ago," said Republican state representative Mike Ritze.  "I think that was corrected in the 80's and 90's."

The Broken Arrow doctor is one of several lawmakers who put State Question 759 on the November ballot.
If voters say yes, it would ban the use of affirmative action in state employment, meaning race and sex could no longer play a role in who the state hires.

"We in government should not pick winners and losers and I think now we're going way overboard to the point where it's become reverse discrimination," said Ritze

However the statistics seem to show otherwise.

A study by the Henderson Center for Social Justice showed that people of color make up 30 percent of Oklahoma's population but make up only 23 percent of workers in the public sector.

"When you look at the state employment statistics, you're not seeing a whole lot of African Americans in these positions and if you do, they're not in positions of power," said Democratic state senator Judy McIntyre.

She is fighting against the proposal, which would also outlaw the use of affirmative action in county and city governments.
   
"It's intended to excite and anger a lot of the Republican base and poor whites," said McIntyre. "Who may believe that African Americans have been given jobs and taken jobs from them and that's not true."

The affirmative action ban could also impact who the state gives contracts to for things like road work.

"What we're seeing now is a king of reverse discrimination," said Ritze. "If we give out a government contract, we had to go out and make sure we had a certain amount of minorities or a certain class perform that."

"He's trying to move to a color blind society and I don't think we're there yet," said McIntyre.

The Oklahoma Policy Institute, a non-partisan think tank, says states that have passed similar bans have seen reduced opportunity for minorities and women.

Voters will have the final say on November 6.


Read more: http://www.kjrh.com/dpp/news/local_news/Oklahoma-State-Question-SQ-759-would-limit-affirmative-action-SQ759#ixzz2AFHpu74C