Your taxes, political accountability and random stuff

Big buzz today on political/news wires and twitter is just who is responsible, accountable for predicted property tax increases this year in many communities in Minnesota.

I have in the past agreed with ideas Sen. Julianne Ortman, R-Chanhassen, has come up with as chair of the Senate Tax Committee (that we should look at tax breaks to special interest like spending for instance), but I can't agree with her analysis and some of her facts as detailed in a Strib oped published Wednesday.

First and biggest myth to bust, well, as a myth: The Legislature didn't raise property taxes local government's do.

That's generally true, but when the Legislature CHANGES the property tax formula that local governments  are REQUIRED BY LAW to use, the Legislature must take at least partial responsibility for increasing property taxes.

Most reasonable people would agree that if the local government does nothing, and the Legislature changes the way it must figure its tax rate, and tax increases happens, it falls to the government that did something (the Legislature) versus the one that did nothing (local governments).

I generally agree local governments are responsible for local property taxes, even if they do have to deal with uncertain state aid. Knowing it's uncertain, they should plan for that. But, when the Legislature changes the law that local governments MUST follow, then the Legislature, in effect, creates an increase in property taxes, all other things being equal.

The Legislature did try to lower property tax rates to make up for the loss of the credit, but as the Star Tribune editorial page points out, that was $30 million in relief, to make up for the lost of $260 million.

One-line takes on the news

Fed to buy $400 billion in long term treasuries, and also some mortgage backed securities

From NYTIMES:
The new effort is an experiment without a direct precedent, although the Fed tried something similar in the 1960s. Essentially, by shifting its money into riskier investments, the Fed hopes to drive down rates without expanding the size of its portfolio, as it has done twice in recent years.

By reducing the supply of long-term Treasuries, the Fed intends to force investors to accept lower rates of return on a wide range of riskier investments.

Economists project that the effort could reduce interest rates by a few tenths of a percentage point, a significant increment when multiplied by the vast extent of borrowing. The forecasting firm Macroeconomic Advisers estimated in advance of the Fed’s announcement — based on its best guess about the details of such a program — that the Fed’s efforts could add about 0.4 percentage points to economic output and create about 350,000 jobs

COMMENT: Interesting that Republican leaders were threatening that the Fed better not do anything to interfere with markets, which, essentially, is their mandate.