Grassley Helps at the Expense of Local Governments
By grforbes Posted in Taxes — Comments (0) / Email this page » / Leave a comment »
Among the additions Grassley has made to the Foreclosure Prevention Act is a property tax relief provision. According to the Des Moines Register, Senator Grassley has added a federal income tax deduction for state and local property taxes. The deduction would be available to federal tax filers that do not itemize on their federal return. This will be of greatest benefit to lower income property owners. While this provision may have positive aspects, it has two obvious problems. First, it is misplaced in the foreclosure act intended to bring relief to the troubled mortgage market. Second, this provision is a clear attempt by a federal politician to bully state and local governments into acting in the way that politician deems appropriate rather than what is in their best interest. This is a particular problem for the flood savaged Midwest.
I will not waste too much time here discussing why this provision is misplaced in this act as I have discussed this in previous Grassley Watch posts, but I will summarize quickly. The Foreclosure Prevention Act is a bad bill that rewards lenders and borrowers for acting irresponsibly. The property tax deduction, as well as a few other good amendments, has been added to this bad bill in an attempt to either influence the vote on this act or push non-related political agendas under the cover of this act. Therefore to vote against this bad bill is to vote against a number of measures intended to provide tax relief and flood assistance. What Senator wants to be on record as voting against tax and flood relief? My guess is very few.
Of greater concern with the property tax deduction provision is the limitation it places on local governments. Grassley will not allow tax filers to take advantage of this provision if their state or local government increases their property tax rate before the end of 2008. It could be said that this is a precautionary measure to ensure that states and localities do not take advantage of this tax relief by increasing their rates to increase revenues. This sounds reasonable; however this is clearly an example of the federal government tying the hands of state and local governments; so much for federalism.
Grassley Watch would never advocate tax increases, however local governments must be able to make decisions based on what is best for their locality. Local government officials are more accountable to their constituents than are federal elected officials. Therefore it is more likely that they will act in the best interest of their voters than the federal government will. Additionally, local decision can have a much greater impact on the everyday lives of voters than federal decisions. This is especially a problem for Midwestern flood savaged areas. Many local and state governments will soon be considering their options to fund flood recovery efforts. Among these options may be property tax increases. Senator Grassley has attempted to dictate property tax rates to them instead of allowing them to make these decisions where they should be made, at the local level.
Senator Grassley's property tax deduction will benefit and be appreciated by many. However, his attempt to further erode the power of state and local governments is unacceptable. Leave local decisions where they belong, at the local level, not dictated to them by federal politicians.
Greg Forbes
Editor of grassleywatch.com
Originally posted 07/01/2008 at Grassley Watch