Friday, February 1, 2008

We Hold These Truths

OK, I have to get something off my chest!

We live in the land of the free and the home of the brave. Lately, though, it seems that we want less of each – less freedom, and certainly less bravery. For example, we are willing accomplices as we allow our local, state, and federal governments to trample on our freedoms of land and property ownership. Remember the words of the Declaration of Independence (emphasis added):

We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness. — That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed, — That whenever any Form of Government becomes destructive of these ends, it is the Right of the People to alter or to abolish it, and to institute new Government, laying its foundation on such principles and organizing its powers in such form, as to them shall seem most likely to effect their Safety and Happiness. Prudence, indeed, will dictate that Governments long established should not be changed for light and transient causes; and accordingly all experience hath shewn that mankind are more disposed to suffer, while evils are sufferable than to right themselves by abolishing the forms to which they are accustomed. But when a long train of abuses and usurpations, pursuing invariably the same Object evinces a design to reduce them under absolute Despotism, it is their right, it is their duty, to throw off such Government, and to provide new Guards for their future security.

As a Realtor®, my primary interest has to do with our freedoms as it pertains to real estate – land, and improvements on the land. As a former president of our local Board of Realtors, I know well the Preamble to the National Association of Realtors – Code of Ethics (emphasis added):

Under all is the land. Upon its wise utilization and widely allocated ownership depend the survival and growth of free institutions and of our civilization. REALTORS® should recognize that the interests of the nation and its citizens require the highest and best use of the land and the widest distribution of land ownership.

So, what have you been up to?

Lately, I’ve been doing some work on behalf of my clients, which will hopefully save them some money. Specifically, I’ve been preparing estimates of (present) market value for my clients’ homes, and comparing the estimates with the taxable value (as determined by the local taxing authorities). In some cases, market values are still well above the taxable value. In many cases, though, market values have fallen below (sometimes, significantly below) the value upon which my client is paying property taxes. The next step is for my clients to appeal their taxable value during the upcoming opportunity within their local taxing authority. Needless to say, my clients are quite happy to learn that they may have a way to lessen the burden of property taxes that they pay each and every year.

Income and Expenses

In this great country, we all have the freedom to earn whatever level of income we desire. We also have the freedom to do with our income that which we wish to do (within the bounds of the law and of our ethics). That is, after we have paid our taxes.

I don’t know how it is in your household, but I’ll tell you how it is in mine. Every year, about this time (tax prep time), we draw up a new budget for the coming year. We first tally our income, then list (and prioritize) our known fixed expenses (including taxes), our planned savings (you know, “pay yourself first”), and finally our discretionary expenses. As we reduce the income line by each line of fixed expenses, savings, and flexible expenses, we have to STOP when we run out of income. Anything on our list beyond when we run out of money becomes a “wish list”. At some times during the year, we may re-prioritize our listed discretionary expenses, depending on needs. But when the money has run out, we just stop spending on discretionary items. We don’t look to our employers (in my case, my clients) and say “Uh, we’ve run out of money, so we need to take more from you”. Can you imagine the response that would get?

It goes without saying that our governments – at all levels, sadly – do not budget the same way that my family does. No, it seems that our elected officials are either unable or unwilling to prioritize spending in any way. Goodness knows, that would expose them to the harsh realities that some people might be hurt by where their “pet” projects actually fall on the scale of urgency of need. At all levels, our governments routinely run out of money to spend – there is never enough!

Our governments turn to us, the so-called “silent majority”, to help them make up the differences between their income (in other words, the taxes we are ALREADY paying) and their desired spending.

A Howard Beale moment

Frankly, I’m tired of this practice, and, like the character of Howard Beale in Network, “I’m mad as he** and I’m not going to take this anymore”.

A pebble here, a pebble there…

Our elected officials first turn to property taxes to fund their shortfalls. Remember, “Under all is the land”. With the annual increases in our property taxes (as I found during my research on behalf of my clients), we’re slowly letting the land under us be taxed away from us.

Next, our elected officials turn to “special assessments” to fund even more “pet projects”. We hear the same refrain each time – “on an average home, valued at $200,000, the increase for this assessment will ONLY be $25 each year. I don’t know about you, but $25 here and $25 there, and pretty soon, you’re talking about real money. And so goes another few pebbles of “under all is the land”.

The words of Thomas Jefferson, written more than 230 years ago, still ring true today. Jefferson anticipated that governments would eventually try to become all-powerful potentates over their subjects, so he made clear that the power of government is derived from the consent of the governed (meaning US). That’s why I stated earlier that we are willing accomplices as our freedoms are taken away.

So how does this all tie together?

A few years ago, a terrific book was written which touches on this important subject. The title? The PRICE of GOVERNMENT: Getting the Results We Need in an Age of Permanent Fiscal Crisis, written by David Osborne and Peter Hutchinson. The authors recommend a process for governmental budgeting not unlike what I do with my family.

As you can imagine, the book fell on deaf ears within the governmental ranks. I mean, come on! What do you mean we ran out of money? We’ll just “tax ‘em” some more!

It’s time to make sure our elected officials, at every level, understand our anger and frustration over their (apparent) disregard of basic home economics. Balance your (profligate) spending with your income (the taxes that WE pay). Tighten your (overhanging gut) belt. Prioritize what is important and make sure the critical stuff is adequately funded (uh, that would begin with our security). Cut out all the “fluff” – even if that means a diminishment of your (precious) power of authority.

Do you get it?

People - remember Howard Beale!

How long are you willing to let the pebbles underneath you be picked off?

2 comments:

Missy said...

Vance, excellent post. If eveyone did as your family did both personally and the gov't we would not have that kind of debt.
I am amazed at the SEV's now being higher than the paid price of the homes. I've had no clients that were successful in getting them changed. Have you?

Vance Shutes said...

Missy,

Thanks for your kind words. The more work I did in evaluating my client's taxable values, the angrier I got about how far we've let governmental spending get out of hand.

This year, I have no doubt that many of my clients will be successful in their appeals of their taxable values.