Kalb & Garvin On Wallen & Coldwater Tax Abatement
John Kalb and Mark Garvin both spoke against the Wallen & Coldwater road tax abatement at last week’s city council public hearing. Both of them touched on points I raised with a previous post and I want to highlight their arguments. Both made effective arguments even if council didn’t agree.
Mark Garvin
John Kalb
At Least We’re Not Indianapolis
From today’s JG:
INDIANAPOLIS – A study shows Indianapolis Public Schools have the lowest graduation rate for black male students among 63 urban districts nationwide.
In the 2005-06 school year, just 19 percent of black males and 19 percent of white males graduated from IPS, according to the rankings compiled by the Schott Foundation for Public Education.
Only 19% of white and and black males graduate?!? THAT is the definition of a failed school district. You can bet that anybody who COULD get out of the IPS district already has…
County Cracks Down On BBQ - Are You Kidding Me?
I don’t even know what to say about this other than what a bunch of bozos.
Allen County restaurants will likely no longer be allowed to start grilling ribs and other meats outdoors, although existing businesses can continue the practice.
The county commissioners Friday agreed to repeal part of the local health code that allowed restaurants to cook food outdoors for 10 days each month but grandfathered businesses that currently have permits.
Mindy Waldron, Fort Wayne-Allen County Department of Health administrator, opposed allowing existing businesses to continue the practice because it goes against state health regulations. She said outdoor cooking facilities don’t have the same safety requirements as those indoors, including regular hand washing.
Are you kidding me? Seriously, cities all over this country have BBQ restaurants that cook outdoors regularly yet they don’t find the need to crack down on them. Is this the kind of regulation the county should be wasting their time on? A bunch of self-professed “conservatives” have decided that no new BBQ restaurant should be allowed to operate in this county.
County government becomes a bigger caricature of ridiculousness every single week. To channel Sylvester, is there anybody reading this blog that thinks this regulation is necessary?
Mayor Henry Leads On Bridges While The County Flounders
Mayor Tom Henry responded to the county commissioners abdication of responsibility to maintain our bridges by suggesting the county put it to a referendum. Imagine that? A group of politicians actually trusting the citizenry to decide how to best spend their own money - blasphemy!
Unfortunately the county wasted so much time trying to figure out a way to pawn their responsibilities off on everyone else they’ve now missed the deadline to get it on the fall ballot. Another explanation for why the county hadn’t thought of this before could be because they were too busy avoiding a referendum at all costs on the Maplecrest extension project.
Does anyone else find it rather sad that it took the mayor of Fort Wayne to solve a county government problem? Will the commissioners now step in and figure out how to solve the city’s budget problem? Nevermind, they’d just raise taxes…
Stadiums Don’t Create Jobs
Dan Turkette of Fort Wayne News has a post up highlighting a Wall Street Journal story regarding the woeful job creation performance of newly constructed stadiums. It’s a must read for all those that think Harrison Square is going to be some kind of panacea for Fort Wayne’s economic future…
School Board Status Quo
Evert Mol had a thought-provoking post up at his Code Blue Schools blog today regarding Becky Hill’s announcement that she’s challenging Jon Olinger for the 3rd district school board seat. I will provide no commentary but merely link to the post:
The GiaQianta gang, trying to get incumbent Jon Olinger off the board because he had the nerve to vote against the bond issue, has come up with an opponent to run against him. Is this the woman who left her position as head of the Wells Street YWCA because she was in over her head? Who retired early because she had run the Y into the ground resulting in its closure? Apparently she does have one qualification, the ability to get in line behind Mark and follow the leader.
Ok, so just a touch of commentary. Remember when GiaQuinta said the school board didn’t need 7 Mark GiaQunitas?
“Seven Mark GiaQuintas on the Fort Wayne Community Schools board would be a recipe for disaster,” GiaQuinta said.
Well one is too many if you ask me, but exactly how many are the voters willing to tolerate?
Housing Bailout, part 2, Congress makes tax code even more complicated
This is the second part of my post concerning the Housing Bailout, HB 3221. HB 3221 was passed by the House and will soon be passed by the Senate.
This post will focus on part of the bill; the part dealing with a “first time homebuyer credit;” which should actually be called a complicated interest free loan or an accountant and Internal Revenue Service job creation act.
Let me start by saying that our tax code is by far the most complicated in the world. Congress seems determined to make it more complicated each and every year. As most of you know I am a CPA and my profession benefits each time the tax code is made more complicated since it forces more people to hire a tax professional and since those tax professionals can charge higher fees as the work they perform for their clients becomes increasingly complicated.
I am against making the tax code more complicated because I think the tax code should be simple and easily understood by taxpayers…
With HB 3221 Congress is desperately trying to stimulate the US Housing Market. In its current form HB 3221 does quite a bit of tinkering with the tax code. This post will discuss the “tinkering” that I feel is the most egregious. The “first time homebuyer tax credit” is intended to make first time home buyers leap into the housing market by giving those tax payers a large cash infusion when they file their next annual tax return.
First time home owners are will now get a fully refundable Federal tax credit (actually an interest free loan) in certain circumstances. A first time homebuyer is a taxpayer who did not have an ownership interest in a principal residence in the US during the three year period prior to the purchase of the home to which the credit applies. The “tax credit” is granted to first time homebuyers who purchase a house between April 9th, 2008 and June 30th, 2009. (Don’t worry, Congress will almost certainly extend this next year as they always do).
Taxpayers who meet the above two requirements will receive a refundable tax credit on their personal taxes filed for the year in question. This tax credit will be 10% of the purchase price of the home with a maximum tax credit of $7500. This tax credit will phase out for single taxpayers who make between $75,000 and $95,000; meaning those who have an adjusted gross income (AGI) of less then $75,000 get the full tax credit, those who have an AGI above $95,000 get no tax credit, and those in between get a partial tax credit. Married filers phase out between $150,000 and $170,000.
This is best shown with an example. Lets say Bob is married and he and his wife Sue buy a house in downtown Fort Wayne in order to be near the Harrison Square Project. Lets say Bob and Sue were traditional college students and lived in dorms for the last four years and did not own a house in the last three years. Lets say Bob and Sue have a total AGI of $50,000 per year. Lets say they purchase a house for $100,000 on July 25th, 2008. This means they will qualify for a refundable tax credit of $7500 on their 2008 tax return which must be filed by April 15th, 2009. Lets say they have their taxes prepared by SBS CPA Group (My company) and they are due a Federal refund of $3000 without considering this tax credit. Since they qualify for the $7500 tax credit the IRS will send them a tax refund of $10,500 ($3000 + $7500). Congress hopes Bob and Sue will then turn around and spend this money in Fort Wayne to spur the local economy…
Now is where it gets much more complicated for the taxpayers who qualify for this tax credit; because, it is not really a tax credit at all, instead it is an interest free loan courtesy of Congress via the Internal Revenue Service.
The tax credit must be paid back to the IRS ratably over fifteen years with no interest charge beginning in the second taxable year after the taxable year in which the home was purchased.
This is best shown using the example of Bob and Sue above. Bob and Sue will have to pay $500 per year back to the Internal Revenue Service starting in the year 2010 and ending in the year 2024. In each of these years they will have to fill out an additional form and file it with their taxes. Lets say that SBS CPA Group prepares their 2010 taxes in early 2011. Lets say not including their payback of part of the “tax credit”to the IRS they would have received a Federal refund of $3000. Then we would take their refund due ($3000) and subtract the $500 they owe the IRS and they would instead get back a Federal refund of $2500.
But wait, it gets even more complicated…
If the taxpayer sells the home or the home ever ceases to be the primary residence of the the taxpayer or the taxpayers spouse prior to complete repayment of the tax credit, any remaining tax credit repayment amount is due on the tax return for the year the home is sold or ceases to be used as the principle residence. However, the credit repayment amount may not exceed the gain from the sale of the residence to an unrelated person. No amount is recaptured after the death of a taxpayer. In the case of a transfer of the residence to a spouse or to a former spouse incident to divorce, the transferee spouse (Not the transferor spouse) will be responsible for any future recapture.
The above section is long and complicated and will be litigated in court for sure since there is room for abuse. This section is best looked at with our example of Bob and Sue.
If Bob and Sue live happy lives in their house near Harrison Square until 2025 or beyond then they will simply pay $500 back to the IRS via their personal tax return for tax years 2010 - 2024.
If Bob and Sue are killed in a car crash in October of 2009 then the IRS will never be paid back the $7500 interest free loan at all.
If Sue gets a great job offer in Arizona in 2009 they may decide to sell their house near Harrison Square. Assuming they sell the house for $90,000 there is no gain on the sale of their house and the IRS will never be paid back the $7500 interest free loan. Assuming the house is sold for $110,000 then there is a $10,000 gain on the house and Bob and Sue will payback the entire $7500 credit back to the IRS when they file their 2009 tax return in early 2010. (So they better have that money saved and available to pay Uncle Sam) In this case the IRS would have basically given Bob and Sue $7500 in early 2009 and then in early 2010 Bob and Sue would send that money right back to the IRS.
Lets say Bob and Sue are living in Fort Wayne and they decide to get divorced. Lets say they get divorced in 2009. Lets say in the divorce settlement Sue gets the house and Bob gets their other assets. In this case Sue now owes the IRS $7500 and she will pay them back $500 per year over fifteen years as long as the house is her primary residence.
This has got to be one of the dumbest schemes I have ever seen Congress come up with. Some of my reasons for disagreeing with this “tax credit” are:
1. The Congressional Budget Office has estimated that this modification of the tax code will cost the taxpayers 4.853 billion dollars over the next ten years. This cost will be added to the National Debt and it will have to be paid back with interest. This cost assumes that the program will not be extended past June 30th, 2009 and we all know how doubtful that is… Please remember the Democrats suspended the “pay-asyou-go-rules” for HB 3221 since it is so important in their opinion that the cost should just be added to the Federal Debt. Basically the Federal Government is giving certain taxpayers an interest free loan and it is borrowing money by selling US Treasuries in order to get the money to finance that interest free loan… Only Congress could come up with something that stupid.
2. It makes the tax code even more complicated and will not in any way benefit this country in my opinion. I cannot imagine any reasonable person would ever go and purchase a house just so they could get an interest free loan for the government during the following year.
3. The IRS will have a difficult time tracking the repayments as will taxpayers and their tax preparers and accountants. This is going to get abused and will cause us to have to hire more IRS agents in order to track the payback system.
Provisions like this really increase my blood pressure.
Is there ANYONE reading this post who thinks that this specific provision of the Housing Bailout Bill is a good provision?
Really, I am looking for just one person…
Please let me know what you think in the comment section.
Mike Sylvester
Housing Bailout summary, part 1, the Democrats lied…
HB 3221 is a 700 page law that passed the House today and is likely to pass the Senate this week. The bill is not in its final form yet; therefore, some of the items in this post may change when the bill becomes law.
Over 99% of the Congressional Democrats support this bill. Between 1/3 and 1/4 of the Congressional Republicans support this bill.
Mark Souder, our Republican Congressman in Indiana’s 3rd Congressional District did vote correctly on this bill; he voted against it.
I disagree with this bill; however, after analyzing it I have to say it is not as bad as I originally thought it would be. I do oppose it; however, I have calmed down quite a bit after two or three hours of research. HB 3221 is a bill that should not have been passed; however, it is not as crippling as I first thought.
The worst thing about HB 3221 is that it once again illustrates how the Congressional Democrats are completely shattering their 2006 campaign promise to restore fiscal sanity to Washington. In 2006 Nancy Pelosi, Harry Reid, and the vast majority of Congressional Democrats ran on a platform that included “Pay-as-you-go-rules.” “Pay-as-you-go-rules” require that you designate new sources of revenue to pay for all new spending. HB 3221 is estimated to cost the US taxpayers 25 billion dollars. The Democrats decided to suspend the “Pay-as-you-go-rules” again and they decided to just add the costs of this bill directly to the Federal Debt (Which is currently just over 9.5 trillion dollars on a cash basis).
This is shameful and Nancy Pelosi and all of the Congressional Democrats who voted for this bill should be ashamed of themselves for passing the cost of this bill (with interest) onto future generations of Americans.
The second thing about this bill that angers me is that it raises the National Debt limit from 9.8 trillion dollars on a cash basis to 10.6 trillion dollars on a cash basis. This further shows that the Democrats have absolutely no intention of restoring fiscal discipline. IN fact, they are already saying that they will add at last another 1.1 trillion dollars to the National Debt.
The Democrats absolutely lied and have completely broken their campaign promise to restore fiscal discipline in Washington DC.
Part 2 of this post will analyze HB 3221 and its effect on America.
Mike Sylvester
Councilmembers Send Budget Letter To The Mayor
On Tuesday three members of the city council sent a letter to Mayor Henry regarding the 2009 budget. According to Tom Didier, Liz Brown and Marty Bender, tax increases are pretty much off the table. They also suggest that a good budget will have to start from leadership in the mayor’s office:
Although there have been recent suggestions to look at reducing the homestead credit or raising taxes, it is imperative that in order to make informed budget decisions that we council members first know that all departments have taken the necessary steps to reduce costs wherever possible.
The best job that the City Council can do with respect to passing a good 2009 budget comes from your leadership as our Executive. We will look at the budget you present and challenge spending where it may seem unreasonable.
You can read the full letter here.
The Marx-ist Struggle
Phil Marx, of the blog My HUD House, has been featured in the most recent edition of Fort Wayne Reader:
Inner city blues
Blogger Phil Marx of My H.U.D. House chronicles his day-to-day struggles with drug dealers and his frustrations with the F.W.P.D.
Link (Fort Wayne Reader)
“Late one October night in 2006, a Molotov cocktail exploded on the back porch of Phil Marx’s house. Another burst in the back yard, while a third smoldered in the front.
Marx doesn’t live in Baghdad or Mogadishu or Kabul. He lives in Fort Wayne, in a house on East Suttenfield just a few blocks from the headquarters of the Fort Wayne Police Department. For almost 13 years, Marx has been waging a war with the drug dealers in his neighborhood who use his corner — and sometimes his front yard — as a place to do business”
Be sure to check out the full article!
Related FWP posts:
Marx Is Still The Best (2008-05-09)
Are You Reading The Best Blog In Town? (2008-03-11)
