By: steveegg

steveegg — Tue, 27 Jul 2010 23:02:10 +0000

Regarding the homeowner half of the shift, kindly answer this question – who is responsible for the 12 months’ worth of taxes not yet paid when the house is sold, the seller or the buyer? Be aware that I will ask a follow-up based on your answer.

As for the municipal half of that shift, I wasn’t going to bring that up, but since you insisted on bringing it up, I will. What do you suppose the net effects of losing the interest on the “prepaid” taxes and shifting the collections of said taxes to a monthly schedule will be? If you said higher taxes to pay for borrowing because the money isn’t there in the summer months when most of the municipal bills come due, give yourself a cigar.

I could very easily have broken very bad into Neumann’s plan by calling it the same kind of shift that Jim Doyle and the Democrats have done with the state budget to make it appear to be in balance, but I didn’t.

By: John Sawyer

John Sawyer — Mon, 26 Jul 2010 22:15:43 +0000

Neumann’s plan eliminates 2 bubbles, resulting in the property tax being kept in the economy instead of with the government or with mortgage banks (likely in NY).

The first bubble is the escrow accounts. Every month, a mortgage holder pays the 1/12 of the property tax into an escrow account along with the mortgage. Under Neumann’s plan, this entire “bubble” is returned to the property owner at the end of 2011. In 2012, the property owner pays the exact same way, just to the municipality instead of the escrow account, resulting in 1 full year’s worth of extra money in their hands.

According to page 832 of the Wisconsin Bluebook, 71% of property tax is paid by homeowners [http://www.legis.state.wi.us/lrb/bb/09bb/pdf/621-862.pdf]. Assuming 2/3 pay mortgage, that’s 50% of property tax payers that will greatly benefit from Neumann’s plan – according to the numbers in Neumann’s plan (you should read it once), that’s ~$6 billion.

The second bubble is the state’s savings account that buffers the property tax payments to the municipalities. Assume 100% of the 2011 tax is paid by Jan 31, 2012. This money is kept in a bank account that municipalities draw from as needed throughout 2012. Under Neumann’s plan, this money is returned to the property owners, and the municipalities get 1/12 of the property tax paid directly to them every month (there is still a $1 billion buffer in the state’s savings account — look into tax credits paid by the state). Sure, there are negatives to not having this money in the state’s bank, but 100% of fiscal conservatives will agree that putting the money into the hands of property owners is much better than keeping it with the state.

For the non-escrow property owners, in January 2012, they would have 100% of their property tax more than they would have without Neumann’s plan. In June 2012, they would have 50% of their property tax more than they would have without Neumann’s plan. In Dec 2012, it’s pretty much even for them, but it jumps right back up to 100% in January 2013.

So, there you have it. Proof that Neumann’s plan injects a ton of money into the Wisconsin economy in early 2012. If you don’t want to call it a tax cut, that’s fine — just acknowledge that is has the same economic effect as a tax cut.

Oh, comparing property tax to income tax to call Neumann’s analogy of government to business is complete crap. You simply compared government to government in order to pull your own “smoke and mirrors” trick (blatant re-use of Walker’s talking points).

Comments on: Well, you’re wrong – Neumann property tax edition

By: steveegg

By: John Sawyer