I sure had my fun at Kirby Wilbur’s expense yesterday, pointing out the rather amusing flaw in the language of the new tax cutting initiative he’s promoting, which ends up slashing property taxes by an astounding 99.4 percent, rather than the mere 30 percent reduction he promised his KVI audience.
To be fair, Kirby emailed me to explain that the text of the initiative was written by Floyd Brown and Wynn Cannon, adding “I favored a different approach when asked.” If that different approach includes a revenue-neutral property tax homestead exemption or circuit breaker, I’d be happy to join him in a bipartisan crusade for tax fairness. I genuinely like Kirby, and I think we’d make a great team.
That said, I think that the text of Initiative 1030 offers a textbook example of the follies of our initiative process, and of our Republican tax-cutting crusaders in general, for if you don’t understand the difference between, say, an “assessed value” and a “property tax,” then you really have no business rewriting our tax code.
For example, while I-1030’s unfortunate miswording may provide the initiative’s most amusing flaw, it is far from its most fatal, for though virtually eliminating the property tax altogether without offering an alternative revenue source would be a public policy disaster, it is not technically unconstitutional. The means by which I-1030’s authors seek to do so however, is.
Here is I-1030’s pertinent subsection, which would apply to “all taxes levied and collected in tax year 2009 and thereafter.”
The assessed value of property for all privately owned real property must not exceed the property tax on the same property for the tax year ending December 31, 2008, reduced by thirty percent. The reduction provided in this subsection may not shift property taxes. The regular levies of all taxing districts shall be reduced as necessary to prevent the values exempted under this subsection from resulting in a higher tax rate that would have occurred in the absence of the reduction.
Ignore for a moment the comical miswording that sets the “assessed value” to the “property tax” less thirty percent (I assume they mean to set it to the assessed value less thirty percent), and the vague, pseudo-legal mumbling about not shifting taxes. The intent of the initiative is to reduce the assessed value of all parcels of real property to 2008 levels less 30 percent (or, 99.4% as the case might be), and then freeze them at that assessed value “thereafter.” The problem with this approach (other than that it is just plain dumb policy) is that it clearly violates the uniformity of clause of Article VII, Section 1 of the Washington State Constitution: “All taxes shall be uniform upon the same class of property…”
Since the “fair value” of different properties rise (or fall) at different rates, I-1030 would immediately violate the uniformity clause, providing an effectively lower tax rate on fast appreciating properties than on those whose fair value has appreciated at a slower rate, or even declined. This is an issue that has already been well adjudicated by the courts, and any serious tax cutter would never have pursued this approach had he done his homework.
I-1030 also neglects to note that “real property” consists of both the land value and the improvements upon it (you know, like your house or a 50-story office tower) and thus fails to address the thorny issue of how its provisions apply to new construction. Either new construction is assessed at fair market value while all other property remains at 2008-less-30% levels—a clear violation of the uniformity clause—or, assessed value of all parcels remain frozen in time in perpetuity, regardless of the huge disparity in the value of improvements subsequently made upon them, which is also a, um… clear violation of the uniformity clause.
Not to mention, just plain stupid.
This kind of amateurish legislative hackery is actually typical of initiatives of this ilk, which explains why so many of Tim Eyman’s measures have ended up being thrown out by the courts. But I-1030 is worthy of fisking despite its laughable language and its fatal congenital defects, because it is crap like this that routinely manages to distort the public debate on property tax reform in the absence of substantive proposals from the Democrats in Olympia.
Coming up, I-1030’s authors’ ignorance of our tax system and the laws that govern it is illustrated further by a critique of the initiative from a policy perspective.