Wednesday, July 21, 2010

Neumann Plan Would Monkey-Wrench Schools, Police And Fire Services, For Starters

Mark Neumann floats out an insane bit of tea partyish pandering in a proposal to let local property taxpayers withhold their normal, lump-sum 2012 payments at the end of 2011 - - also a tax benefit to filers deducting such things - - and then dribble them in on monthly installments in 2012. [I have made this language more accurate, as suggested.]

He sees it as a way to inject money into the economy.

Instead, local governments, without budgeted money to pay legal debts or employee salaries - - would collapse through phased shortfall and starvation - - the Grover Norquist fantasy realized (
“My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub.”).

There would be increased spending on guns, hoses, security systems, do-it-yourself pothole repair kits, light bulbs for street lights, and other basic survival items.

Not to mention a lot of new home-schooled children, with parents quitting their jobs to manage the kids at home all day.

Is the goal of the Neumann campaign to out-Walker Walker in wacky gamesmanship?

If so, well done.

Who would endorse this silly, all-rhetoric-no-substance press release reach for headlines and desperation votes- - besides arsonists, truants and habitual criminals?

A new GOP voting bloc?

6 comments:

Publius said...

While the proposal is gimmicky, you clearly don't understand how this proposal works.

His plan doesn't rob any level of government of any money, it just defers the payments.

Instead of sending your tax bill in in 2011 to pay for 2012 operations of government, you would pay through the course of 2012 for 2012 operations of government.

But don't let simple budgeting get in the way of a good, hyperbolic headline.

I actually think it's a dumb idea because it amounts to a federal tax increase because for those people who pay in advance (in 2011 to pay for 2012 operations) will lose the federal tax deduction and won't get it again until their 2012 tax filings are due in 2013.

James Rowen said...

You may be right. If so, I acknowledge that.

It still looks to me like it would short governments money at the beginning of the year, and wreak havoc with hiring, payrolls and contracting.

And you are correct about the loss of the deduction against taxable income.

All in all, it's a gimmick.

John said...

Here's the proof that you do not pay an entire year's worth of taxes. Pay particular attention to the dates - they are important.

I'll use Neumann's example of a homeowner who escrows every month on a $6000/yr tax bill ($500/month).


*Dec 2010*: The municipality sends the property owner a $6000 tax bill due by Jan 31, 2011.

*Jan 2011*: The property owner pays $500 to an escrow account for the Dec 2011 tax bill. The municipality receives the $6000 payment from the 2010 tax bill and puts the money into a savings account. The municipality uses $500 from the savings account for Jan 2011 expenses.

*Feb 2011*: The property owner pays $500 to an escrow account for the Dec 2011 tax bill. The municipality uses $500 from the savings account for Feb 2011 expenses.
.....
.....
.....
*Dec 2011*: The property owner pays $500 to an escrow account for the Dec 2011 tax bill. The municipality uses $500 from the savings account for the Dec 2011 expenses. The municipality mails out the property tax bill that is due in Jan 2012.

UNDER NEUMANN'S PLAN (which is voluntary, and there are good reasons for some people and businesses not to do this)

*Jan 2012*: The property owner never pays Dec 2011 tax bill. The property owner receives $6000 from the escrow account and never pays it to the government -- this $6000 is a TAX CUT. The property owner pays $500 to the municipality INSTEAD OF the escrow account. The municipality uses the $500 payment for Jan 2012 expenses.

*Feb 2012*: The property owner pays $500 to the municipality INSTEAD OF the escrow account. The municipality uses the $500 for Feb 2012 payments.
....
....
....


See how that works? The homeowner continues to pay the exact same amount every single month, except now has $6000 extra that is not owed the government, and the municipality receives enough money each month to pay expenses. You have to call the $6000 a TAX CUT - there is no other name for it! The property owner never pays it and the municipality never receives it!

Basically, the plan eliminates the middleman / buffer. The buffer can either be the escrow account, or it can be the municipality savings account, depending how you prefer to think of it. Either way, you're putting money directly back into the hands of the property owner, which in conservative theories is significantly preferred to keeping it with the government.


COUNTERARGUMENTS

1. [It doesn't work for people who don't escrow.] Wrong, it just works differently. In Jan 2012, the person will have $6000 more than they would have had, in Feb 2012, the person will have $5500 more than they would have had, and in Dec 2012, the person will have $500 more than they would have had. Again, the property owner is in a better position to optimize that money than the government is, unless you subscribe to liberal theories.

2. [The municipality might spend more than $500 in Jan or Feb.] That would be a problem, except the State of Wisconsin puts $1 billion of tax credits into the savings account. So, how the example above would really work: the municipality receives $450 in Jan 2012 from the property owner and extracts $50 from the savings account in order to meet their $500 needs in Jan 2012. If they need $600 in January and $400 in June, for example, then they would extract $150 from the savings account instead of $50 in Jan 2012, and it would even out in June.

John said...

Here's the proof that you do not pay an entire year's worth of taxes. Pay particular attention to the dates - they are important.

I'll use Neumann's example of a homeowner who escrows every month on a $6000/yr tax bill ($500/month).


*Dec 2010*: The municipality sends the property owner a $6000 tax bill due by Jan 31, 2011.

*Jan 2011*: The property owner pays $500 to an escrow account for the Dec 2011 tax bill. The municipality receives the $6000 payment from the 2010 tax bill and puts the money into a savings account. The municipality uses $500 from the savings account for Jan 2011 expenses.

*Feb 2011*: The property owner pays $500 to an escrow account for the Dec 2011 tax bill. The municipality uses $500 from the savings account for Feb 2011 expenses.
.....
.....
.....
*Dec 2011*: The property owner pays $500 to an escrow account for the Dec 2011 tax bill. The municipality uses $500 from the savings account for the Dec 2011 expenses. The municipality mails out the property tax bill that is due in Jan 2012.

UNDER NEUMANN'S PLAN (which is voluntary, and there are good reasons for some people and businesses not to do this)

*Jan 2012*: The property owner never pays Dec 2011 tax bill. The property owner receives $6000 from the escrow account and never pays it to the government -- this $6000 is a TAX CUT. The property owner pays $500 to the municipality INSTEAD OF the escrow account. The municipality uses the $500 payment for Jan 2012 expenses.

*Feb 2012*: The property owner pays $500 to the municipality INSTEAD OF the escrow account. The municipality uses the $500 for Feb 2012 payments.
....
....
....


See how that works? The homeowner continues to pay the exact same amount every single month, except now has $6000 extra that is not owed the government, and the municipality receives enough money each month to pay expenses. You have to call the $6000 a TAX CUT - there is no other name for it! The property owner never pays it and the municipality never receives it!

Basically, the plan eliminates the middleman / buffer. The buffer can either be the escrow account, or it can be the municipality savings account, depending how you prefer to think of it. Either way, you're putting money directly back into the hands of the property owner, which in conservative theories is significantly preferred to keeping it with the government.

Good for Goose and Gander said...

Thank god Democratic candidates do not engage in gimmickery and Cadillac Healthcare for Pizza Sales while running on the I Saved A Damsel In Distress At The Fair ticket.

Gimmicks are bad,
unless...it's your own guy.

Anonymous said...

Having heard Mark Neumann explain this on Sykes' show - am still trying to figure out whether Neumann is a complete idiot, or Neumann thinks we are.

Neumann's entire premise is that property taxes are paid after the fact - which they are obviously not.