Will city taxes really stop returning suburbanites?
August 8, 2008
In May, while in Las Vegas on assignment for The Daily Record I happened to interview C. William “Bill” Struever, the successful developer who heads the Baltimore company Struever Bros. Eccles & Rouse, who was there for a conference. We chatted about many things, including the state of the economy and the price of oil, and one memorable thing he said to me was this:
Clearly, these are uncertain times, but I think there’s a very helpful aspect of $120-a-barrel oil, which is the end of this destructive and wasteful fascination with suburbs and cars.
This idea resurfaced in my mind as I read two cover stories recently, one in The Washington Post and another in The New Republic. Both dealt with what academics, demographers and developers have known for years, what the Post calls “suburban migration” and TNR calls “demographic inversion”—affluent people are moving back to major U.S. cities in high numbers and pricing low-income city folks out of neighborhoods that have typically been associated with poverty, crime and urban decay.
The Post pins this almost exclusively on high gas prices, which it says are now the number two financial concern for American families, while TNR points to the retail, transit and cultural amenities that are returning to cities and attracting young professionals to live downtown.
I was trying to think of how this trend applies to Baltimore, and what the city can do to accommodate returning suburban exiles. Certainly, neighborhoods like Canton, Fells Point and Federal Hill have benefited from yuppies’ renewed interest, and many more areas stand to gain as well.
There has also been a lot of chatter lately about how to attract businesses and residents back to the city, and a lot of it involves building a more comprehensive mass transit system and lowering property taxes. Baltimore has a property tax rate nearly double that of surrounding suburbs. Some believe that high taxes have crippled Baltimore’s ability to attract and keep businesses headquartered in our town.
But if what these publications and Bill Struever say is true, why worry about the tax rate at all?
If the people and businesses are coming back to the city for reasons that have nothing to do with property taxes, why not keep property taxes sky-high, and really build the city’s tax base? That way, we’ll have more money in the general fund to improve infrastructure and mass transit, to provide social services to rich and poor alike and to concentrate on large-scale public works. Why not welcome reformed suburbanites with open arms and ask them to open their wallets?
ROBBIE WHELAN, Business Writer
Sphere: Related ContentFYI: Comment period for ‘corporate loophole’ regs closes May 27
May 7, 2008
In the current edition of the Maryland Register, the State Department of Assessments and Taxation has published its proposed regulations to implement the recordation and transfer taxes on the transfer of a controlling interest in a real property entity. The comment period ends May 27.
As Robert M. Ercole said in a column last December, the new tax “is one of the ‘corporate loopholes’ sought to be closed by Gov. Martin O’Malley in the recent Special Session of the General Assembly” and will take effect on July 1.
In a nutshell, prior law let corporations and other entities get around the transfer and recordation taxes on real estate by selling not the property, but rather a controlling interest in the subsidiary that owns the property.
The new law, contained in Tax Property Article §12-117(c) and §13-103(b), was supposed to treat both transfers the same, tax-wise. SDAT estimated that would bring in an extra $62 million in Fiscal Year 2009 — $14 million for the state, and $48 million in local recordation and transfer taxes.
However, the lawmakers left a lot of details up to SDAT — and not everyone is happy with the results. Ballard Spahr’s Bruce Benshoof, for example, has qualms about SDAT’s definition of “beneficial ownership” and the treatment of “step transactions,” that is, sales of beneficial interests that occur over the course of time. (Read his comments here.)
Comments may be sent to SDAT Assistant Director Robert E. Young, 301 W. Preston Street, 8th Floor, Baltimore, Md. 21201; or call 410-767-1184, e-mail ryoung[at]dat.state.md.us, or fax to 410-333-5873. A public hearing has not been scheduled.
BARBARA GRZINCIC, Managing Editor/Law
Sphere: Related ContentWhen will your check come in?
April 28, 2008
If you’re curious when to expect your economic stimulus check (…or already mentally spending it…), click here to see the IRS’s payment schedule.
The schedule’s based on the last two digits of your social security number: basically, the lower the digits are, the faster you’ll get your check. And if you used direct deposit for your federal tax return, you’ll have cash in hand sooner than your paper-check counterparts.
If you didn’t pay your taxes on time - tsk tsk - you should expect to wait at least two weeks longer.
Apparently some lucky ducks could even see their deposits today.
JACKIE SAUTER, Web Editor
Sphere: Related ContentIn the eleventh hour
April 16, 2008
It comes but once a year: Procrastinators’ Night. It’s the tax deadline, celebrated by last-hour filers who throng post office lobbies with returns in hand — or, in the best fashion, are filling out the forms as the clock ticks inexorably toward midnight.
Usually, the scene is best played out in the main Baltimore post office, where traffic runs heavy outside on Fayette Street and workers gaily donning reflective safety garb accept the envelopes in curbside service. Inside, many people are taking the lower road, separating W-2 forms and scribbling numbers on 1040s.
But there’s celebrations in the burbs, too — take, for example, the Pasadena post office at 11 p.m. on Tuesday.
Eight cars are parked near the door, their occupants arriving and departing on this nocturnal tribute to Uncle Sam. Further back on the lot, a woman sits in her car — its interior lights showing her glorious pursuit of the deadline, looking over paperwork, scribbling on a form, turning pages. It’s 11:05 p.m., 55 minutes and counting.
Inside the lobby, a man and woman fill out their forms together. So romantic!
Except for the other filers coming and going, they’re nearly alone in this reverie.
There’s not even a postal worker in sight. Except for the lobby, the joint is closed.
I inquire, gently: “If there’s no one here to take the return, how will anyone know you mailed it in time?”
The woman looks up momentarily, long enough to reply: “Beats me.”
Tick… tick… tick….
DAVID ETTLIN, Daily Record Freelancer
Sphere: Related ContentMoCo exec gets $65,000 bathroom
March 20, 2008
Cost of a private bathroom, small sitting room and shower for MoCo executive Ike Leggett = $65,225. Oh, and a critical story in the Washington Post.
Timing is everything; even though the bathroom’s cost was approved last spring, its construction begins as Leggett proposes 225 job cuts and increased property taxes to close the county’s nearly $300M budget shortfall.
Leggett’s security chief says that walking through a crowded lobby to use the public restroom could expose him to harm, even though former County Executive Doug Duncan used it for his 12 years in office.
“We had perfectly good bathrooms right at the elevators,” [Duncan] said yesterday. When asked whether he ever felt unsafe using the public restroom, Duncan chuckled, “Heck no.”
PG Exec Jack Johnson has a private bathroom, built prior to his election; so does DC Mayor Adrian Fenty, although he uses the public bathroom at city hall. But unlike federal office buildings, the MoCo offices don’t have security checkpoints or metal detectors.
“We have had some challenging, disgruntled employees or citizens demanding to see the county executive, and from a security perspective he can walk into that,” Chief Administrative Officer Timothy L. Firestine said. “Quite frankly, Ike didn’t want [the new bathroom], but we more or less suggested from a security perspective that he needs it.”
Call me crazy, but it sounds like what’s needed isn’t a private bathroom; it’s a metal detector.
This one only costs $4,000.
But don’t take my word for it - hear what Leggett has to say in his online town hall meeting today at noon.
JACKIE SAUTER, Web Editor
Sphere: Related ContentMoCo provides calculator for property taxes
March 19, 2008
Beginning April 1, home sellers in Montgomery County are required to provide their buyers with an estimate of the next year’s property tax bill.
The idea behind the new law is to “eliminate the shock” that many county homebuyers have endured after realizing they will pay significantly higher property taxers than the previous owner.
See, even though the state reassesses residential properties every three years, the taxable assessment is capped at a 10% maximum increase per year - except when the home changes ownership. The new buyer will pay tax based on 100% of the current taxable assessed value.
In some cases, the difference is in the thousands.
But the county’s making this one easy: they’re providing a web-based calculator that will reveal the answer for potential homeowners.
Have fun testing it out. I tried out a few addresses of stately homes in the Potomac area, only to cringe at the estimates.
If you do try it, remember only to put the house number and street name - ex.: 100 Maple.
JACKIE SAUTER, Web Editor
Sphere: Related ContentCigar, tobacco products under fire in legislature
February 27, 2008
My colleague, Ben Mook, is referring to HB 1558 as The Blunt Bill. It would “forbid the sale or distribution of a cigarette or cigar [or component part of a cigarette or cigar] that contains a specified constituent.”
Such as the individually-wrapped vanilla and cherry flavored cigars at the convenience store counter. The ones that teenagers - and others - are cutting open to stuff marijuana inside, providing themselves with a cover for illegal drug use.
At least, that’s the deviant behavior we figure the bills are aiming to curtail. Similar legislation in Philadelphia was passed by the City Council in December 2006 and signed into law a month later, only to be overturned by a Philadelphia judge in March 2007.
And Philadelphia’s not the only city to take a stand against blunts. According to a report from the Chicago Sun-Times, the Windy City aimed to ban flavored cigar wrappers that were being used “to obscure the sight and smell of marijuana wrapped inside.”
Outlawing blunts isn’t the only way that Maryland is snuffing out the tobacco industry - at least, that’s what Steve
Castro, co-owner of Davidus Cigars Ltd., says. He’s taken issue with SB 513 and HB1095, which would increase the tax on other tobacco products (OTP) to 25 percent of the wholesale price (it is currently 15 percent).
“The proposed increase … will crush the premium cigar business in Maryland and the businesses of dozens of tobacconists throughout the state,” he said. “Premium cigars, unlike cigarettes, are highly sensitive to price increases because they are more a choice than a habit. They are adult products that make ordinary moments special and special moments extraordinary.”
Davidus is headquartered in Monrovia with six tobacco stores throughout the state in Howard, Montgomery and Frederick counties.
JACKIE SAUTER, Web Editor
Sphere: Related ContentHappy new year! Now pay your property tax
January 2, 2008
Guess what could be waiting for you at home?
Your latest Maryland property assessment, and be prepared: it’s not going to reflect the slowdown in the real estate market.
The assessments will arrive this week at homes and businesses, and the average one is rising 33 percent over three years ago.
It’s an average 75 percent increase in Baltimore and nearly 52 percent increase in PG County. MoCo had the smallest increase on average: about 16 percent. The jumps reflect the overall increase in the market in the past three years.
There is one silver lining: the Homestead Property Tax Credit, which limits tax increases on homeowners’ primary residences to no more than 10 percent per year. And it’s a one-time application.
JACKIE SAUTER, Multimedia Editor
Sphere: Related ContentSpecial session cost just over $360,000
December 18, 2007
The Maryland General Assembly’s special session last month cost taxpayers $360,873 (not including, of course, the tax hikes that resulted from it). That’s an average of slightly more than $17,000 per day for the three-week session.
JACKIE SAUTER, Multimedia Editor
Sphere: Related ContentCall us if health care bill will affect your business
November 28, 2007
So who here knew that a health care expansion bill snuck through at the last second of the special session? It was not one of the highest-profile issues of the marathon, three-week legislative blitz overshadowed by the slot machine debate and measures to raise $1.4 billion in new revenue.
But it could be important for small business. Legislative analysts wrote that a plan to subsidize employee health coverage for small businesses could help add 15,000 people to the rolls of the state’s insured, with a price tag around $30 million.
The coverage isn’t for everyone - just businesses with between 2 and 9 employees that want to offer insurance with “wellness” options like health club membership assistance. And the source of the money is not necessary solidified forever. It could change within a few years.
Will this affect your business? If it doesn’t, do you think you’re being unfairly left out? Or is this a good start on helping small businesses keep their workers healthy?
I’m working on a story about this for Friday. Want to get in on it? Call me at (443) 524-8175.
-ANDY ROSEN, Business Writer
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