StamfordCT

Those Who Sweat For It

I stumbled across this in a 106 year old weekly newspaper called "The Public."   I think it has relevance for much of Stamford's land.  The numbers might have changed, but the pattern hasn't.  Gains on land value DON'T come out of thin air, and we ought to think clearly and thoughtfully about who is  rightly entitled to them.  (I didn't say "legally entitled" -- laws evolve; they may not exactly keep up with justice or logic.)  How much does Stamford collect in a transfer tax?  (And I'm not saying that a transfer tax is a just way, either.  But that doesn't minimize the seriousness or importance of the questions.)

THOSE WHO SWEAT FOR IT. From "the Pride of Telfalr," by Blmore Elliott Feake. Harper Bros.

"Here are some very interesting papers—to me," observed Davenport, socially taking them up. "They are the abstract and deed of the Holbrook farm, out in Turtle township. I bought the farm on Tuesday, held it two days, sold it on Thursday and made $2,000."

Bowman started.

"That's more money than I make in a year," said he.

"It's more than I make in two days," answered Morris, laughing. Perhaps he was not wholly blind to the operations going on behind Bowman's high, white scholarly forehead, and rather enjoyed the situation.

"It's easy money for you, Morris, but somebody sweat for it," the minister could not help saying.

"Yes, I have thought of that," said Davenport. "But with me it's come easy, go easy."

"In that case I don't know that you could do better than let $50 of it go toward the piano for the Sunday school," suggested Bowman, only half in earnest.

"I'll do it," said Davenport, and wrote Bowman a check for the amount. "Bui did you ever stop to think just who it was that sweat for that money? Not the man who has just bought the farm, for he will make money on the investment. Not Holbrook, who has just sold the farm, for he bought the land for $30 an acre and sold it for $100, and has lived off It for a quarter of a century besides, and lived well. Not the first white man that owned it, for he got the tract and thousands of acres besides from the Indians for a barrel of cheap whisky. Not the Indians, for they never did anything for it except to hunt over it."

"I should say the people who sweat for that money were the laborers who have worked on the land all these years and improved it."

"No, for they received a due wage for their labor. Now, I'll tell you who it was. Not to go back too far, it was the people who made the State of Illinois, guaranteeing protection to life and property. It was the people who built the cities of this and neighboring States, creating a market for the wheat and corn and stock which came off that farm. It was the railroads which made it possible to carry this wheat and corn and stock to a market. It was the men who made the steel which made the railroads possible. These people, thousands upon thousands in number, sweat for that money, as I see it."

Remember Leona Helmsley's statement?  "We don't pay taxes.  The little people pay taxes."  She wasn't talking tax evasion -- she was describing how we've structured ourselves.

How Should We Pay for I-95, I-84, I-91 and the Parkways? High Fuel Taxes, or Tolls?

When I moved to Connecticut in 1975, the Connecticut Turnpike and the Merritt Parkway both had tollbooths.  Some years ago, after a terrible accident in which a dozing truckdriver rear-ended cars waiting to pay their toll at Stratford, killing passengers in at least one car, the toll booths were removed.

Now the state, like most others, is strapped for cash, and there are calls to again use tolls to help pay for the roads.  But there is a noisy constituency which resists tolls.

Connecticut has among the highest taxes on gasoline in the US, and also the highest pump prices.  According to  http://www.connecticutgasprices.com/tax_info.aspx, we pay 62.5¢/g [cents per gallon] on gasoline, and 61.4¢/g on diesel.  California's are the highest at 63.9 and 72.0¢/g (necessitated in part, I'm sure, by California's 30 year old Proposition 13 which keeps the property taxes of old-timers to a minute fraction of 1% of the property's market value).  Alaska's are the lowest, at 26.4 and 32.4¢/g.  (These include Federal excise taxes of 18.4¢/g for gasoline and 24.4¢/g for diesel.)

Here are the surrounding states:

Connecticut       62.5             61.4

Massachusetts     41.9¢/g       47.9¢/g

Rhode Island         49.4           55.4

New York            59.6           64.7

New Jersey         32.9           41.9

Pennsylvania        50.7           63.6 

Vermont             38.4           50.4

New Hampshire   38.0           44.0

Why did I list so many states? Because 18-wheelers have large fuel tanks -- as much as 300 gallon capacity.  That gives them the option to fill them when prices are good, and avoid buying in states with high prices.   At 5 mpg, 300 gallons gives a 1500 mile range.

Here are two tables from http://www.icpa.org/consumer_motor.htm showing Connecticut's prices compared to nearby states.  First gasoline:

State	State Excise Tax	Other State Taxes	Federal Tax	Total Taxes Per Gallon	AAA Average Retail Price/Regular Gasoline - 5/8/09	Retail Price Minus Government Taxes
NY	$0.0805	$0.3204	$0.1840	$0.5849	$2.29	$1.71
CT	$0.2500	$0.1242	$0.1840	$0.5582	$2.28	$1.72
RI	$0.2700	$0.0400	$0.1840	$0.4940	$2.19	$1.70
ME	$0.2460	$0.0150	$0.1840	$0.4450	$2.20	$1.76
MA	$0.2100	$0.0250	$0.1840	$0.4190	$2.13	$1.71
NH	$0.1800	$0.0260	$0.1840	$0.3900	$2.09	$1.70
VT	$0.1900	$0.0100	$0.1840	$0.3840	$2.11	$1.73
NJ	$0.1050	$0.0400	$0.1840	$0.3290	$2.02	$1.69

And then Diesel:  

State	State Excise Tax	Other State Taxes	Federal Tax	Total Taxes Per Gallon	AAA Average Retail Price/Diesel Fuel - 5/8/09	Retail Price Minus Government Taxes
NY	$0.0850	$0.3230	$0.2440	$0.6520	$2.61	$1.96
CT**	$0.4340		$0.2440	$0.6780	$2.60	$1.92
RI	$0.3000	$0.0100	$0.2440	$0.5540	$2.47	$1.92
VT	$0.2500	$0.0100	$0.2440	$0.5040	$2.45	$1.95
MA	$0.2100	$0.0250	$0.2440	$0.4790	$2.42	$1.94
ME	$0.2880	$0.0700	$0.2440	$0.6020	$2.41	$1.81
NH	$0.1800	$0.0160	$0.2440	$0.4400	$2.27	$1.83
NJ	$0.1350	$0.0400	$0.2440	$0.4190	$2.22	$1.80

Long haul truckers can save nearly 40 cents per gallon by buying their diesel in New Jersey.  So the effect of collecting 43 cents per gallon for CT compared to NJ's 13.5 cents is to shift the cost of paying for CT's highways onto CT's short-haul truckers, who seldom leave the state.  Long-haul gets a free ride.

"Never tax anything
That would be of value to your State,
That could and would run away, or
That could and would come to you."

For several years, I made a weekly trip from southwestern Connecticut to suburban Philadelphia.  I'd fill my gas tank at Ft. Lee, NJ, in the morning, and again as I returned.  I seldom bought any gas in Connecticut.  Most drivers of passenger cars don't have that opportunity.  But trucks certainly do.  I paid a lot of tolls, and always thought I was getting a good deal. 

Back to the subject of tolls: Connecticut has two main east-west interstates: I-95, which runs along the southern tier, and I-84, which runs from Danbury at the west, through Hartford and then northeast to meet up with the Massachusetts Turnpike en route to Boston.  We charge tolls on none of them.   Let's look at what some nearby states charge.

Massachusetts  Exit 1 to 14 (Stockbridge to Route 128/I-95)  120 miles  Auto:  $2.70; Truck 5 axles  $15.15;  Bus: 3 axles  $7.15

New Jersey: Exit 1 to 18: 113 miles  

• Auto: Cash $9.05;   EZPass weekday off peak $6.80; EZPass weekend and peak $9.05
• Truck, Class T2: Cash $18.60;  EZPass weekday off peak $16.15; EZPass weekend and peak $17.00
• Truck, Class T6: Cash $37.15;  EZPass weekday off peak $32.25.15; EZPass weekend and peak $33.95
• Bus: Cash $14.35;  EZPass $13.10 at all times

Garden State Parkway: 172 miles, $3.50

PA Turnpike: end to end 358 miles.

• Passenger car: $24.70 plus $3.75 for the Delaware River Bridge
• Truck Class 3 with 4 axles: $45.00 plus $11.25 for bridge [15,000 to 19,000 pounds]
• Truck Class 5 with 4 axles: $73.75 and $18.75 for bridge  [30,000 to 45,000 pounds]
• Truck Class 8 with 4 axles: $175.00 plus $18.75 for bridge  [80,000 to 100,000 pounds]

PA I-80:  PA proposes to put in "Open Road Tolling," which will not charge passenger vehicles until they pass the second collection point, which is expected to exempt 70% of all cars entering and exiting I-80.  Gantries will be placed approximately every 30 miles.

Car rate in 2010: $0.08 per mile; 5-axle trucks $0.30 per mile = $25 and $93 for the entire length of I-80 in PA.

Suppose Connecticut charged trucks $0.30 per mile on I-95.  The distance is 112 miles.  That would be $33.60 from every truck.  To collect $33.60 in state taxes via a state tax of .43 per gallon of diesel, we'd need to sell an average of 78 gallons of diesel fuel to each trucker passing through.   At 5 mpg, a through truck uses 22 gallons to get across CT, and that represents less than 10% of a full tank.

It seems to me that imposing a toll on CT's major highways, at least for trucks, makes a lot of sense. 

And my opinion is that cars ought to pay tolls as well, particularly at rush hour.  I'm intrigued by the I-80 approach, exempting some drivers, particularly off-peak.  By shifting some users away from rush hour use of the roads, we may be able to make travel much smoother for all.  EZPass technology makes this very doable.  (Economics Nobel prize winner Bill Vickrey anticipated EZPass, and saw how it could be used to make things work better.)

I don't think we ought to be asking drivers who live far from our major highways and who never use them to finance the main roads, particularly if we don't ask those who do use them to pay for them.

According to the Congressional Budget Office, large trucks do about 6 times the damage that a passenger car does.  Do we want to provide a free ride to those trucks?

User fees seem eminently logical and just.  Gas and diesel taxes can be part of that picture, but tolls should also be used.  I don't see a good reason to charge higher gas taxes than surrounding states do.  But we might be in a position to impose higher tolls, given the scarce alternatives.  Few trucks will detour around Connecticut in order to avoid a $20 or even $40 toll.  But they might time their trips differently, avoiding rush hour, if we gave them an incentive to do so and a place to park for a few hours near each entry to Connecticut.

Lawson Purdy: The Influence of Taxation on the Prosperity of Cities

Reprinted in The Public, October 6, 1906

THE INFLUENCE OF TAXATION ON THE PROSPERITY OF CITIES

A Paper Read by Lawson Purdy of New York
Before the League of American Municipalities,
in Session at Chicago, September 26, 1906.

In 1873, Enoch Ensley, a wealthy planter of Tennessee, wrote to Governor Brown asking him to call a special session of the legislature to amend the constitution so that changes could be made in the tax laws of Tennessee. The tax rate of Nashville was three and one-half per cent and of Memphis four per cent, and Mr. Ensley said that the burden on business was insupportable. Great land owner as he was, however, Ensley did not urge a search for new sources of revenue, but rather the application of the "rule or motto" which, he said, "It would be well for the State to adopt and have cut into the stone at the capitol (in large letters and have them gilded), in the Senate chamber, the hall of the House of Representatives and in the governor's office, . . . to-wit:

"Never tax anything
That would be of value to your State,
That could and would run away, or
That could and would come to you."

This rule laid down by Ensley has become an axiom, but before it can be applied the constitutions of about thirty-five States must be amended by repealing those despotic limitations on legislative power which are not found in the earlier constitutions, and which should find no place in the constitution of any free people. Because of constitutional and statutory restraints upon the power of cities we need discuss only what can be accomplished in most cities by executive officials under existing laws.

Conditions of Prosperity.

City officials often regard the city as apart and distinct from the individual citizens, and sometimes therefore uphold policies which appear to be in the interest of the city corporation, although opposed to the interests of the citizens. This is, of course, a short-sighted view. In reality nothing can be good for the city which is bad for the citizen, nor bad for the city which is good for the citizens. Again, many consider the interest of classes and speak of what will be advantageous to manufacturers or shopkeepers or land owners. This, too, is a mistaken attitude. Citizens should be regarded alike as men, and not as the owners or users of some kind of property. All depend upon the workers who render service for service, and it is fair therefore to consider the interest of all citizens as bound up in the interest of those who earn their living; and that city may be regarded as the most prosperous in which it is easiest and most agreeable to earn a living.

The interests of the city and of its citizens are identical. Nevertheless, they may be viewed from both standpoints.

Is LVT the answer? It depends what the question is.

The title for this post was prompted by an article in the NYT about people not raised on farms deciding to become farmers, particularly in places near large cities.  It seems that local food was said to be the answer to a number of questions.  I'm generally in favor of it, but I'm not sure it is the answer to as many questions as its supporters claim.  That doesn't make "local food" a bad thing; just not the answer to as many questions as it might seem.

But the title for this post sprang to mind.  It seems to me that Land Value Taxation is the answer to a lot of very important questions.

The Colorado Self-Sufficiency Standard, 2008

Yes -- there is a Connecticut angle on this ... keep reading!

Link: http://www.cclponline.org/pubfiles/SelfSufficiency08_FinalProof.pdf
The newest Self Sufficiency Standard Study was published recently, for Colorado.   The SSS is a detailing of a no-frills cost of living which meets all the most simply defined needs but provides no frills.  I've spent a lot of time on most of the 30+ studies (mostly on one state at a time; a few on a major metropolitan area), and have mixed feelings about them.  On the one hand, they are probably the best assessment we've got the cost of a the-very-bottom-of-lower-middle-class lifestyle in various places in the US.  They use a consistent and logical methodology and tailor the findings to various configurations of families.  So far, very good and useful.

Working harder, making others richer

Bob Herbert wrote, in his 3/11/08 column entitled "Sharing the Pain", in part,

The American dream is on life support because men and women by the millions who want very much to work — who still have in their heads the ideal of a thriving family in a nice home with maybe a picket fence — are unable to find a decent job.

For years, families have been fighting weakness on the employment front with every other option imaginable.

• Wives and mothers have gone to work.   
  
• People have been putting in more hours and working additional jobs.
• And Americans have plunged like Olympic diving champions into every form of debt they could find.

Who has gotten the benefits of women spending many more years and many more hours per year in the workplace?  Who has benefited from Americans carrying more and more debt?  How does this relate to the run-up in the price of housing?  I said I'd write about these issues in another post.   This is it.

Fortunes Made in Real Estate

Americans have a tendency to respect those who are "self-made men." This seems to include people whose fortunes have been made in real estate.  The latest example in the news is the outgoing governor of New York, whose father, Bernard Spitzer, reportedly has a $500 million portfolio of properties, most or all in NYC.

I have nothing against real estate developers in their role as developers.  They bring large amounts of money and multiple talents to bear to create new modern buildings on sites previously occupied by more modest buildings suitable to another decade or century. And when they build they generally create the venues in which dozens, even hundreds, of entrepreneurial visions can be made into reality, and where thousands, sometimes tens of thousands, of people can be employed in a single building.  Appropriate development of choice sites, served by existing infrastructure such as NYC's elaborate transportation system and things as prosaic as city water, sanitary sewers, stormwater runoff, and all the other systems that are paid for by we-the-people: schools, public safety, public health, libraries, courts, hospitals, etc., means that specialized work can take in the center of the central business district, conducted by people who come from a 360 degree radius.  It minimizes sprawl on the fringe, and makes the economy work more smoothly.

But there are other facets of the real estate business that I think are "opportunities for plunder" that should be restructured to serve the common good instead of the private good.  This involves a revision of our notions of what is right, what is just, what is rightly private property and what legitimately belongs to the commons.

Closet Georgists and Georgites: Bill Buckley, and others

Link: Jay Nordlinger on Impromptus on National Review Online.

Since Bill Buckley died a few weeks ago, I've read numerous tributes, and a few have mentioned Buckley's abiding interest in the ideas of Henry George.  The newest reference comes from the opening paragraphs of a National Review article today:

Friends, a week ago I put some notes on WFB in Impromptus. (That column is here.) Want a few more notes? Just a few more?

You know that he loved peanut butter. Ate it every morning of his life. Took it everywhere he went (because sometimes you couldn’t get it). But did you also know he had a thing for coffee ice cream? Yes — a real jones for it. I introduced him to Ben & Jerry’s Coffee Heath Bar Crunch — one of the best things on the planet.

(Yes, I know that they are communists or whatever. Just eat the ice cream.)

Note 2: Years ago, I had a spot of trouble finding housing in Manhattan. And he said to me, “Do you know I’m a closet George-ite?” He meant the 19th-century American economist and social thinker Henry George (author of Progress and Poverty).

How I wish that Bill Buckley, and others whose education was good enough to include exposure to the ideas of Henry George, had left/would leave their closets.  (Perhaps the reason has something to do with something related to pluralistic ignorance; perhaps it is something more nefarious.)

Bill Buckley did mention Henry George repeatedly in his writings and on the air, but in passing, as if to run it up the flag pole, rather than as a confident advocate of an idea that might not be popular with his constituency. 

Financing Municipal Spending through Sales Taxes: an Inferior "Solution"

Chicago will soon have the highest sales tax of any major city in the US.  Not the highest sales tax in the US -- there is a town in northeastern Alabama, Arab, which imposes sales taxes as high as 12% -- but the highest of any major city.  (Alabama's sales taxes -- designed to place the maximum burden on poor people, while making life easier for upper-income residents, particularly the property-owners -- typically tax even groceries!)   An AP article reports:

Among the things Chicago wants to be known for, having the highest total sales taxes of any major U.S. city is probably not one of them.

But that's what it's getting after the Cook County Board voted Saturday to double the county sales tax to 1.75 percent. When added to the city's sales tax, the county' increase has the cumulative effect of setting a 10.25 percent sales tax on goods bought in Chicago.

When the county rate increase takes effect in November, someone buying $100 worth of merchandise in Chicago would pay $110.25.

The rates in New York and Los Angeles are below 8.5 percent. The next highest rate in the country is in Memphis, Tenn., at 9.25 percent.

The tax increase is expected to add about $426 million annually to county coffers, and the money is meant to close a projected $234 million deficit. The budget is also designed to create more than 1,000 new county jobs.