The homestead property tax is not working if a majority of us are over burdened and a minority under burdened. That kind of inequity is a hallmark of an unjust and unconstitutional tax system.
In my previous blog post ( Article X ), I describe why it is impossible to levy an assessor driven tax that is constitutional and as fair as an income driven tax. Therefore, the logic tells us that we need a change. But unfortunately the options to change the assessor driven tax have failed, leaving us with the status quo homestead property tax that remains unjust.
We measure our tax burdens in percentages of our incomes. We know that our individual homestead property tax burdens can be very high, but we don’t know if it is our fair share or not. However, now we have information at the Minnesota Department of Revenue (DOR) that tells us what our individual fair shares are. Just click the MN DOR button above to see the chart.
The DOR has taken our total assessor driven homestead property tax revenue and equated it as a percent burden of our total homestead incomes. It means that the average percent burden, in each of the taxing districts, is also our individual fair share that will produce the same tax revenue as the assessor driven tax.
The reason I am presenting the DOR data is to illustrate that we don’t need to change how our homestead property taxes are collected to make them fair. All we need to do is to adjust our individual taxes by applying the DOR’s fair percentage of our incomes.
The idea of adjusting our homestead property taxes based on our incomes, after they have been collected, is not a new concept. It is being used today for property tax relief that is commonly referred to as the “circuit breaker.”
Since our legislators are vetted in the “circuit breaker” of today, they should not have any objections to a “circuit breaker” of tomorrow that is applied to all homeowners, rather than to the low and middle income home owners only.
The new “circuit breaker” will become an equalizer rather than a relief program.
For example, St. Paul’s fair share is 3% (DOR chart). Therefore, if you own a home in St. Paul and your taxable income is $100,000, your fair share of property taxes is $3,000. But if you paid $3,500 in taxes, you will get a refund of $500. And if you paid $2,500, you will have to pay another $500.
Monday, July 29, 2013
Sunday, July 21, 2013
Article X
Our State Constitution implies, and sometime states, that all of our state laws/statutes shall protect us and treat us justly. When it comes to taxes, the constitution is very specific. In Section 1 of Article X it states that “Taxes shall be uniform upon the same class of subjects and shall be levied and collected for public purposes”
As individual subjects we fit in one or more of the three major tax classifications, the income tax, the sales tax and the homestead property tax. The income tax and the sales tax are straight forward in their concept and easily comply with the uniformity clause. However, our homestead property tax concept is not straight forward and does not comply with the uniformity clause.
Unlike the income tax and sales tax that is based on one variable for tax levies, the homestead property tax is based on variables and assumptions. With such a mix it is impossible to achieve any kind of uniformity for the homestead property tax burden.
One of the variables is the unrealized capital gains (our home value) which is different for all of us and may be different from what the assessor has set it at if the home’s capital gains were realized. Aside from the inability to establish a correct capital gains, it is an extremely convoluted process to assess a tax on something that we have not realized as a financial gain.
However, our government has a very cavalier attitude about taxing our unrealized capital gains. It simply assumes that all of us have some additional funds to pay for their assessed tax burden. And if we don’t have the funds, we must face the consequences of losing our homes.
This and the two previous posts illustrates that the status quo homestead property tax in Minnesota goes against our concept of home ownership in a free society that is protected by a constitution. However, there is a simple solution to adjust the status quo homestead property taxes via the legislature or the courts to have it comply with the intent of our State Constitution.
In my future blog posts, I will comment on the options that are open for us. But mean time, I would like to know if there is anybody that is against a fair homestead property taxes.
As individual subjects we fit in one or more of the three major tax classifications, the income tax, the sales tax and the homestead property tax. The income tax and the sales tax are straight forward in their concept and easily comply with the uniformity clause. However, our homestead property tax concept is not straight forward and does not comply with the uniformity clause.
Unlike the income tax and sales tax that is based on one variable for tax levies, the homestead property tax is based on variables and assumptions. With such a mix it is impossible to achieve any kind of uniformity for the homestead property tax burden.
One of the variables is the unrealized capital gains (our home value) which is different for all of us and may be different from what the assessor has set it at if the home’s capital gains were realized. Aside from the inability to establish a correct capital gains, it is an extremely convoluted process to assess a tax on something that we have not realized as a financial gain.
However, our government has a very cavalier attitude about taxing our unrealized capital gains. It simply assumes that all of us have some additional funds to pay for their assessed tax burden. And if we don’t have the funds, we must face the consequences of losing our homes.
This and the two previous posts illustrates that the status quo homestead property tax in Minnesota goes against our concept of home ownership in a free society that is protected by a constitution. However, there is a simple solution to adjust the status quo homestead property taxes via the legislature or the courts to have it comply with the intent of our State Constitution.
In my future blog posts, I will comment on the options that are open for us. But mean time, I would like to know if there is anybody that is against a fair homestead property taxes.
Sunday, July 14, 2013
Rogue Tax
In my previous blog post I characterized the homestead property tax as being rogue. We all know that we need taxes to sustain our government, but it is very difficult to tolerate a rogue tax. The homestead property tax is based on a premiss that is impossible to sustain on its own. It is impossible to pay taxes on capital gains that one has not realized. To perpetuate the impossible property tax demand, the government assumes that all of us have other means of income to satisfy the impossible tax demand. Such an assumption, by the government, makes our homestead property taxes a form of extortion that can have extremely harsh consequences for the homeowner.
In Minnesota, are we all so desensitized that we can’t see that our homestead property tax is exclusively based on unrealized capital gains? I am convinced that there would be a massive protest if our income tax code would start taxing all of our unrealized capital gains. But why is it then that we can’t make the connection between property taxes and income taxes from the justice point of view?. After all, we pay all of our taxes from our incomes. Californians passed Proposition 13 that was a revolt/referendum against taxing unrealized capital gains for homestead property taxes.
Minnesota has the tax infrastructure and tools to make our homestead property taxes even more equitable than the California’s Proposition 13. I will comment on its details later, but for now, just click the MN Department of Revenue button above to see the resource for a just and equitable homestead property tax.
Our State Constitution, in its first article and section, states the following: Object of government. Government is instituted for the security, benefit and protection of the people, in whom all political power is inherent, together with the right to alter, modify or reform government whenever required by the public good.
Our present form of homestead property taxes that take our homes as hostages in exchange for a ransom are punitive and in complete opposition of providing security, benefit and protection, It is extremely hard to accept the fact that the same government that is supposed to protect us has promulgated tax laws that harm us.
In Minnesota, are we all so desensitized that we can’t see that our homestead property tax is exclusively based on unrealized capital gains? I am convinced that there would be a massive protest if our income tax code would start taxing all of our unrealized capital gains. But why is it then that we can’t make the connection between property taxes and income taxes from the justice point of view?. After all, we pay all of our taxes from our incomes. Californians passed Proposition 13 that was a revolt/referendum against taxing unrealized capital gains for homestead property taxes.
Minnesota has the tax infrastructure and tools to make our homestead property taxes even more equitable than the California’s Proposition 13. I will comment on its details later, but for now, just click the MN Department of Revenue button above to see the resource for a just and equitable homestead property tax.
Our State Constitution, in its first article and section, states the following: Object of government. Government is instituted for the security, benefit and protection of the people, in whom all political power is inherent, together with the right to alter, modify or reform government whenever required by the public good.
Our present form of homestead property taxes that take our homes as hostages in exchange for a ransom are punitive and in complete opposition of providing security, benefit and protection, It is extremely hard to accept the fact that the same government that is supposed to protect us has promulgated tax laws that harm us.
Sunday, July 7, 2013
Allodial Title
Minnesota State Constitution ( Article 1, Sec. 15) grants us the right to have the American Dream of a homestead under an allodial title. That simply means that there are no “superiors” that can take away that right.
However, the Minnesota homestead property tax laws are in conflict with the allodial title concept of ownership. The laws usurp our State Constitution by placing the government as the “superior” over the sovereign rights of the property owners. In that position, the government has the ultimate right of possession or the authority to impose what amounts to a mandatory user fees for our homesteads. Such juxtaposition is the hallmark of a feudal style ownership that has been specifically prohibited by our State Constitution.
The dark side is that we are subjected by a rogue tax to sustain our local government services. But the bright side is that the rogue tax can be rehabilitated to join the family of fair and just taxes. However, before suggesting a solution, I anticipate there may be readers of my blog who don’t agree with the characterization of the homestead property tax as being rogue. For those skeptics, I will post blogs to illustrate that there is no other tax as aggrieving as the homestead property tax.
I view the “Property Tax Justice - Minnesota” blog as a place for members to vent their grievances and frustrations about the property tax. But most of all, I hope that this will become a SUPPORT-ACTIVIST- LOBBY group to accomplish the MISSION of fair and just homestead property taxes.
However, the Minnesota homestead property tax laws are in conflict with the allodial title concept of ownership. The laws usurp our State Constitution by placing the government as the “superior” over the sovereign rights of the property owners. In that position, the government has the ultimate right of possession or the authority to impose what amounts to a mandatory user fees for our homesteads. Such juxtaposition is the hallmark of a feudal style ownership that has been specifically prohibited by our State Constitution.
The dark side is that we are subjected by a rogue tax to sustain our local government services. But the bright side is that the rogue tax can be rehabilitated to join the family of fair and just taxes. However, before suggesting a solution, I anticipate there may be readers of my blog who don’t agree with the characterization of the homestead property tax as being rogue. For those skeptics, I will post blogs to illustrate that there is no other tax as aggrieving as the homestead property tax.
I view the “Property Tax Justice - Minnesota” blog as a place for members to vent their grievances and frustrations about the property tax. But most of all, I hope that this will become a SUPPORT-ACTIVIST- LOBBY group to accomplish the MISSION of fair and just homestead property taxes.
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