Bacon's Rebellion

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Unthinkable–a Tax Decrease!

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by

Dick Hall-Sizemore
in ,

Patrick Duhaney,City Manager, Virginia Beach

By Dick Hall-Sizemore

According to a report in the Virginian –Pilot, the city manager of Virginia Beach will be recommending that city council reduce the city’s real estate tax rate. He is also recommending that the city delay a previously approved storm-water fee increase.

Last year, the city cut $67 million out of its operating budget in anticipation of COVID-19’s impact on the economy. The impact was not as bad as anticipated and revenues have stabilized. Even with the proposed cut in the real estate tax rate and the delay in the storm-water fee, resulting in a loss of about $9.3 million, the manager projected enough revenue in the budget to recommend 3% salary increases for city employees and the approval of 54 new positions, primarily firefighters and emergency responders.

The fiscal condition of the city of Virginia Beach is not typical of that of other Virginia local governments and there are probably few, if any, others who could afford to take these steps. However, the city is an example for most of the contributors and commenters of Bacon’s Rebellion that governments are not always trying to get as much out of the taxpayers as they can.

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20 responses to “Unthinkable–a Tax Decrease!”

  1. John Martin Avatar
    John Martin

    “governments are not always trying to get as much out of the taxpayers as they can.” They are trying to responsibly govern. GOP hysterics not withstanding

  2. LarrytheG Avatar
    LarrytheG

    Shocking! Just shocking! Are we sure these are liberals?

    😉

  3. James A. Bacon Avatar
    James A. Bacon

    Virginia Beach does have a Republican mayor. What is the partisan makeup of the other City Council members? I think I can say without fear of contradiction that Republicans are more prone to adopt tax cuts than Democrats.

  4. Baconator with extra cheese Avatar
    Baconator with extra cheese

    Increased home assessments are a tool of white supremecy utilized solely for the purpose of keeping people of color from purchasing homes…. repeat 10 times.

    1. Baconator with extra cheese Avatar
      Baconator with extra cheese

      Go read the Charlottesville mayor’s thoughts on the subject… her Facebook page has a great breakdown of housing theory.

    2. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      The primary problem with Nancy’s approach would be a possible constriction on tax revenue for the local government if a large number of homeowners stay in place, but needs increase. A better, broader solution would be to allow local governments to move away from property taxes and piggyback on state income taxes.

      1. LarrytheG Avatar
        LarrytheG

        aside from the “we don’t like to pay taxes – period” folks… A question is – how should we pay for services and infrastructure – what’s the most fair and equitable way that we all pay our fair share?

        There is property tax, real estate tax, income tax and sales tax and I guess a couple of others like value-added.

        Would ANY of these pretty much capture increased costs in their rate structure so that “increasing” the rate would not be necessary?

        Would it be better to charge fees for services instead of taxes?

        Would any of these alternatives move us away from “we don’t like taxes and we hate tax increases even more”?

        1. StarboardLift Avatar
          StarboardLift

          This capitalist is interested in exploring a death tax in some fashion (not exactly the Senate Democrats new proposal) as a lever to prevent accrual of capital passed generationally. But only if it were offset by an elimination of income tax or property tax, for example. This would be my preference to “fetter” the ills of “unfettered” capitalism.

      2. Nancy Naive Avatar
        Nancy Naive

        Historically speaking, how often has that happened? It would be revenue restricting for the first 3 to 5 years but after that, itshould level off. Of course, the temptation would be to charge a higher gains rate since the seller wouldn’t actually see it except as a line item on their cost reconciliation statement.

        Nevertheless, a local income tax is surer. My heartburn with RE taxes is that the excess tax is on unrealized gains. If they did that on your stock/bond investments, the markets would dry up.

    3. Nancy Naive Avatar
      Nancy Naive

      Well, an approach would be to assess a gains tax on the sale and have a fixed RE tax for the life of the owership based on the previous purchase price.

      In this fashion, the localities will receive a revenue that more fairly represents the market, including tax refunds for losses (yeah, it’s possible).

  5. Stephen Haner Avatar
    Stephen Haner

    I cannot read the story because of the paywall, but with real estate values soaring right now a tax rate cut is not necessarily a tax cut. The rate could go down but the average bill still climb. If I do go get the details, my bet is the rate cut is symbolic and the assessment increases substantial.

    1. Nancy Naive Avatar
      Nancy Naive

      Yes, but NOT cutting the tax rate would increase the tax due, so it is a tax cut.

      1. Stephen Haner Avatar
        Stephen Haner

        I actually remember having this exact argument on Bacon’s Rebellion at least 20 years ago. Boring….

        1. Nancy Naive Avatar
          Nancy Naive

          Money is. The only exciting thing about money is spending it!

          Keeping the $ collected the same while lowering the rate actually increases your total gain on the house in the sense of purchase cost + operating cost – sales price = (loss) gain.

    2. Dick Hall-Sizemore Avatar
      Dick Hall-Sizemore

      Not going to give the city any credit at all? Most local governments, including Henrico, use increasing property values to bring in more revenue, while keeping the tax rate static. Folks pay more taxes without there being an increase in the tax rate. (I am not objecting to Henrico’s government because I think the county is generally well governed. But it has been able to keep the rate at the same level for many years because property values, including mine, increased.) By the way, the story does not get into the degree to which property values have increased, if at all.

      1. Stephen Haner Avatar
        Stephen Haner

        Then the reporter is an idiot, leaving that out. Cutting the rate by a penny when the assessments go up 5% is a tax increase. This is why the state requires local governments to be transparent, and to advertise what the tax rate should be to create equal revenue. But this is an old local government shell game….

        Passing on the new storm water tax also tells me the city is rolling in dough…that is the good news for taxpayers.

        1. LarrytheG Avatar
          LarrytheG

          Called the equalized tax rate, right?

          So, here’s a couple of thoughts on increases:

          1. – if the population is growing then more schools and expanded roads are needed. There are two cost components – the capital costs and the operating costs.

          When new folks move in – should their taxes pay for both of those costs?

          2. – If the value of real estate goes up, does that also signify increased cost of living that the county has to pay for salaries?

        2. Dick Hall-Sizemore Avatar
          Dick Hall-Sizemore

          This is at the manager’s recommendation stage. The advertisement requirement kicks in when the council takes preliminary action.

        3. Paul Sweet Avatar
          Paul Sweet

          The base rate for determining if there actually is a tax increase should include both population growth and inflation percentages.

  6. StarboardLift Avatar
    StarboardLift

    Since moving to Virginia Beach in 2007 I have argued that the city should adopt a blend of income and RE taxes.

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