When I first got in on this blogging game, I made a promise to myself: if ever I got 48 comments on a post before making another post, I would retire. The last post has 47 comments, so here we are.
Economic theory suggests that countries, or other sovereignties, may engage in a "race to the bottom", a phrase describing a phenomenon of continuous reduction in taxes and regulatory burden that is supposed to attract capital investment to the country that 'finishes first' and has the least burdensome business environment. Think Cayman Island and Swiss bank accounts.
Limitations of the race-to-the-bottom theory usually involve logistical costs. For example, a business or person wouldn't relocate from Annapolis to Annapolis Royal (Canada) for a tenth of a percent off of property taxes. However, a person has great financial incentive to move outside of the Annapolis city limits. I took advantage of this incentive, and I now write the leading "outsider" and the #7 "maverick" blog involving city of Annapolis politics from a non-resident.
The incentive is lower property taxes.
(Post intermission: Property taxes are asinine. So are income taxes, and many more. Consumption (sales) taxes are the most efficient and the most free-market/free-will way to go. I've always felt this way, but then I read the Fair Tax book by Neal Boortz, and now I really feel this way.)
As we know, there are 2 things that determine how much property tax you pay each year: the property tax rate (PTR) and the tax-assessed value (TAV) of your house. For you math lovers:
PTR x TAV = $$$$$$$ out of your pocket
The rate is the more straight-forward of the 2. The council sets the rate in their infinite wisdom and goes on their merry way. But, even if the rate doesn't change, we could still get screwed. Houses are assessed every 3 years. During real estate bubbles, some house values double over that time. Luckily, the government recognizes that people's incomes will almost never double in 3 years, and they offer protection in the form of the Homestead Credit. The state mandates that the assessed value of a property cannot increase by more than 10% each year. Local jurisdictions are free to lower that percentage, but they cannot raise it.
Anne Arundel County has further lowered the Credit to 2%. Race-to-the-bottom theory would suggest that the City of Annapolis might do the same; yet, true to form, the city has left its rate at 10%.
Three aldermen, in the form of 2 separate bills, have sought out to remedy this. Alderman Israel, a mayoral candidate, introduced O-31-08 which would drop the number to 5%. As required by the Republican National Committee, Alderman Cordle (another mayoral candidate) and Alderman Paone (a crafty and rather tall Ward 2 rep with a fan club on this blog) have sponsored O-34-08, which is the same thing except the number is 2%.
I have a hard time believing this is anything other than election strategy (but that doesn't make it bad). All of these people have had plenty of time to officer this ordinance in the past--they didn't, and it's not because they didn't know it was important. In the last mayoral election, Independent Gilbert Renault got like 2,700 votes and finished second to Moyer by only a few hundred--running a campaign that's only issue was lowering the Homestead Credit from 10% to 4%*.
(*"only issue" is a reach, but that was the main thing)
I don't care who passes it, but the lower, the better.