Property Taxes vs Streetcar?

A Poorly Understood Conflict

Housekeeping note: Here is an easy way to refer people to my newsletter. They merely need to enter “Andrew Sullivan Omaha” in Google search and I pop right up.

---

Mr Fanslau of Omaha’s Planning Department defended TIF in the World Herald, on June 6 (https://andrewlsullivan.substack.com/p/omahas-screwy-planning-dept). Heath Mello came to TIFs defense on June 9 (https://omaha.com/opinion/column/midlands-voices-tax-increment-financing-is-a-strategic-tool-for-omahas-growth/article_94c3da92-229a-11ef-8c16-4f4da8d6aa45.html). Mayor Stothert continues to claim the streetcar will not be paid by taxpayers but by TIF. This is all deception.

To quote Mello “TIF projects substantially increase the taxable value of properties, which, upon the expiration of the TIF period, yields significantly higher property tax revenues.” Translation: If I build a swimming pool in my backyard, it will increase the property value and result in higher taxation. This is a good reason not to build a swimming pool. TIF ultimately pushes up surrounding property evaluations and the taxes from such evaluations. Argue a contrarian position if you must but higher property evaluations are synonymous with higher property taxes among the thinking of most of Omaha.

These people view TIF as a solution but it is actually a symptom of a bad and archaic tax structure. Get rid of the property tax system and you give TIF to the whole City and more people will build swimming pools in their backyards. Hey, do it for the kids!

Here is how myopic and shortsighted these people are. Makebelieve, suddenly, there is no property tax at all. How does a streetcar become funded? Will there be opposition? Will there still be advocates for a streetcar?

First, the opposition will be cut in half. All the talk about TIF has property taxpayers worried but without property taxes, the opposition to the streetcar begins to fade. Second, since the streetcar will not be resulting in higher property tax revenues, those in government will begin to be a bit more cynical of a spending project which generates no revenue for them.

Third, the sincere advocates of the streetcar would focus on the necessity of the streetcar to reduce congestion and crowds. This should have been the focus the whole time but how to fund the streetcar has become the central focus instead which is a huge mistake.  A one-story building does not need an elevator but a ten story building does. The advocates should focus on explaining the necessity of a streetcar instead of how it is funded. Abolishing property taxes would allow them to do so. The advocates would have come up with a more sensible route like this one if funding was not the focus:

EPIC Option abolishes property taxes and many still do not understand how. Here is a simple explanation. You go into the Dollar Store and buy a small bottle of shampoo for $1 and pay a “horrendously oppressive and regressive” sales tax of 7 cents. Yet, if you went to an establishment to have your hair washed and cut, you would pay about $30, but pay no tax whatsoever! Hey, this is welfare for the rich! But with the consumption tax, you would pay a “whopping, horrendously oppressive and regressive” tax of $2.25. Dare anyone compare this consumption tax to property taxes in the thousands of dollars? Consumption tax delivers lots of revenue while preserving the ability of people to easily pay for it. This is a win-win scenario.

Now, let me tell you a secret I did not tell the proponents of the EPIC Option. I think the proposed consumption tax of 7.5 percent is likely to generate too much revenue for the government and should be 6.5 percent. Here is why.

Nebraska’s property taxes are so high, it is often the top or near top payment a property owner ever makes, year to year. The result is excessive delay in desired expenditures.: “Oh, I might take down that dead tree (insert any other desired expenditure) but will have to wait to see how much money I have after paying my property taxes.”

Get rid of the property tax, and people are going to spend money on their dream homes. The demand for backyard swimming pools will double. Those houses without garages will build garages. Scrubbing the backyard deck will give way to buying a new one. Those homes with absolutely no shrubs or gardens, will fill their yards with lilacs, roses, tulips and more. All houses will have fresh coats of paint. People in desire of a second car will now feel free to buy one.  Free the people of property taxes and they will build their own dream homes.