North Dakota Considers Eliminating Property Tax
“I would like to be able to know that my home, no matter what happens to my income or my life, is not going to be taken away from me because I can’t pay a tax,” said Susan Beehler, one in a group of North Dakotans who have pressed for an amendment to the state’s Constitution to end the property tax. They argue that the tax is unpredictable, inconsistent, counter to the concept of property ownership and needless in a state that, thanks in part to wildly successful oil drilling, finds itself in the rare circumstance of carrying budget reserves.
“When,” Ms. Beehler asked, “did we come to believe that government should get rich and we should get poor?”
An unusual coalition of forces, including the North Dakota Chamber of Commerce and the state’s largest public employees’ unions, vehemently oppose the idea, arguing that such a ban would upend this quiet capital. Some big unanswered questions, the opponents say, include precisely how lawmakers would make up some $812 million in annual property tax revenue; what effect the change would have on hundreds of other state laws and regulations that allude to the more than century-old property tax; and what decisions would be left for North Dakota’s cities, counties and other governing boards if, say, they wanted to build a new school, hire more police, open a new park.
“This is a plan without a plan,” said Andy Peterson, president and chairman of the North Dakota Chamber of Commerce, who acknowledged that property taxes have climbed in some parts of the state and that North Dakota’s political leaders need to tackle the issue. “But this solution is a little like giving a barber a razor-sharp butcher knife — and by the way, this barber is blind — and asking him or her to give you a haircut. You’ll get the job done, but you might be missing an ear or an eye.”
Polls conducted last month and last week suggest that voters here overwhelmingly oppose the ballot measure to ban the property tax.
Still, even if the measure here fails on Tuesday, the notion is picking up steam in some Republican circles in other states, including North Carolina, Texas and Pennsylvania.
“No tax should have the power to leave you homeless,” said Jim Cox, a state representative in Pennsylvania who has proposed legislation to eliminate the school property tax in the state where, he said, such taxes have led to residents’ losing homes to sheriff’s sales, entering into reverse mortgages or simply moving away.
In a way, North Dakota, though 48th in population among the states, was a logical place for such a movement to brew. While the state’s property tax collections per capita generally fall near the middle among states, the surge in oil production over the past five years, mainly in the western portion of the state, has seen its effects ripple through other parts of life here. The state’s coffers are full, overflowing even. Assessments of home values, especially in some areas, have risen drastically too.
The political mood here, too, leans toward Republicans (who dominate Bismarck), small government, little intrusion and fiscal conservatism. Though opponents to the property tax here received a $12,000 donation in 2010 from the American Tax Reduction Movement, a sister group to the Howard Jarvis Taxpayers Association, which grew out of California’s Proposition 13, members say the efforts here were largely organic, the result of unhappy property taxpayers getting fed up.
“The same problem kept coming up,” said Charlene Nelson, a homemaker who became a leader of the effort to amend the Constitution, pointing to what she deems the underlying problem with the property tax. “It means all of us are renters — none of us are homeowners.”
In recent years, state officials sent more money to localities to pay for schools in an effort to lower property tax bills. But opponents of the property tax said those efforts did not go nearly far enough, and collected nearly 30,000 signatures on petitions to bring the matter to the ballot.
Those who want to keep the property tax have vastly outraised the opponents, gathering more than $500,000, campaign finance reports show. Though the question is among four on ballots here on Tuesday — including the highly contentious question of whether the University of North Dakota should give up its Fighting Sioux nickname — residents here said they had been deluged with information about the property tax measure, on signs, in radio talk shows and through months of debates in school gymnasiums and recreation halls in small towns like Edgeley and Bowman.
For his part, Gov. Jack Dalrymple, a Republican, said he opposed the property tax ban. “It’s mind-boggling, really,” he said, in an interview, of the effects of such a ban. “We’d be changing everything, frankly.”
The notion, he said, that the state has enough surplus to replace property taxes for localities around the state without raising other taxes is false. For starters, he said, much of the state’s benefits from the oil boom are already dedicated legally to particular funds and cannot simply be transferred to support schools, counties, towns, park districts and the like.
Even if the ban fails, North Dakota lawmakers now seem all but certain to tackle broader solutions to the property tax question as early as next year.
“I have to say that we totally understand that North Dakotans are very concerned about their property tax payments,” Mr. Dalrymple said. “You have a tension there, and people say this can’t keep on.”
http://www.nytimes.com/2012/06/12/us/north-dakota-voters-consider-ending-property-tax.html?_r=1&hp
Beyond the Tried-and-True: Generating Cash in Later Life
These days trying to find high-quality income-producing stocks or bonds—ones yielding better than a measly 2% or 3%—can be as frustrating as trying to tie your shoelaces with one hand.
Don't despair: There are ways to boost income in retirement that go beyond the usual suspects—sometimes way beyond.
Here are five ideas:
1. Grow Trees
If you live in an area where people routinely burn wood to heat their homes, you might consider buying some woodland. Not only can you use the wood to heat your home, you can sell logs to others.
"An awful lot of people in the Northeast use wood for fuel because they can't afford anything else," says Robert Maloney at Squam Lakes Financial Advisors LLC in Holderness, N.H.
The usual quip, however, is that wood will heat you twice: once when you cut it and once when you burn it. That's also a way of saying that this method of earning extra income can be hard work.
The labor starts with weeding out trees for harvesting. (Trees can take decades to reach maturity, so you don't want to cut them all down at once.) The thinning lets the remaining trees grow bigger and provides room for saplings. The felled trees then must be left to dry, which can take more than a year. Finally, the trees need to be cut into logs before they can be sold.
The returns you generate will depend in part on how much of the labor you are willing and able to do yourself and how much you pay for the land, says Theodore E. Howard, professor of forestry economics at the University of New Hampshire in Durham, N.H.
Woodland in New Hampshire is going for around $1,500 an acre, and a cord of wood commands about $115 once it has been cut, according to the New Hampshire Timberland Owners Association in Concord, N.H. A sustainable level of production is about a cord an acre a year.
If you determine firewood doesn't offer a big enough return, there are other possibilities for woodland income. These include leasing the land to hunters, leasing out maple-syrup taps (if you live in a Northern state) and selling timber.
2. Make Loans
You're probably getting less than 1% on your bank deposits—but your bank, using your money, can get as much as 15% for an unsecured loan. Suddenly lending seems appealing.
If you have ever co-signed a loan for a friend or family member, you have come close to being a lender. As a co-signer, you're on the hook for the money if the primary borrower doesn't make the loan payments. The difference is, you don't get any interest.
If the person who needs the loan co-signed has decent credit, it might make sense to make the loan directly. Before doing so, draw up a contract that could potentially be used in a court of law, says Farnoosh Torabi, personal-finance expert and author of "Psych Yourself Rich."
If the idea of lending to family gives you hives, consider lending via a peer-to-peer network such as Prosper.com. That website boasts returns of more than 10%. If you do so, make a variety of loans to different people of different credit quality to help diversify risk, Ms. Torabi says.
3. Rent Out a Room
If your kids have left the nest, you might have a spare room. Instead of downsizing to a smaller home in a weak housing market, consider renting out a room to a lodger. This might be especially suitable for those living in university towns. Graduate students—those whose partying days are behind them—could make great paying houseguests.
There are a few things to consider, however.
You need to check out local zoning laws," says Chip Addis, co-founder and president of financial-planning firm Addis & Hill Financial Advisors in Wayne, Pa. Not every town has liberal policies, he says.
Then there are questions of safety and privacy. You might want to run a background check on a potential lodger, and you will need to decide which part of your house you are willing to share. Says Mr. Addis: "There are a lot of practical issues, such as the use of the washer/dryer and parking."
Dana Pingenot, president of Dallas-based Lee Financial Corp., says she had an exchange student live with her family for a year, mainly for the experience. "When she goes home, we'll think about renting the room out," says Ms. Pingenot, who expects to charge somewhere between $200 to $400 a month for the room.
Note: Rental income may be taxable, so talk to a tax specialist.
4. Tutor Students
Anyone who has reached retirement age should have amassed a wealth of knowledge on a variety of topics, all of which could provide the basis for a part-time career.
For instance, if you have been an engineer for 30 years, you clearly have some math skills. Perhaps that could be parlayed into a part-time gig tutoring school kids?
"As long as you are a patient person and have a gift for making complex concepts clear and simple, perhaps you could be a very good tutor," says Linda Abraham, founder of Accepted.com, a college-admissions consulting firm in Los Angeles. Pay for tutors can vary widely. Some people can command as much as $200 an hour, but around $75 to $100 is more typical, she says.
There are other avenues to pursue on the teaching front. New York native Andrew McKeon parlayed a career at Goldman Sachs Group Inc. into tutoring students for the GMAT business-school entrance test. He did that through education firm Kaplan Inc., but cautions that the selection process was rigorous.
In addition to financial rewards, these sorts of jobs have the added benefit of social interaction. For many in retirement, that can be a blessing.
5. Preferred Stock
Don't forget about preferred stock. The high yields offered by these hybrid securities—often more than 6%—could put a big smile on your face.
Preferred stocks are like bonds in that they have a fixed percentage payout. They are, however, lower down on the food chain than bonds in terms of claims on bankrupt companies, so while the returns tend to be higher, preferred stock carries more risk.
"It is still equity and not debt in terms of claims," says Vinny Catalano, president of New York-based Blue Marble Research. "If the company goes south, you would likely not receive very much money."
So which preferred stock do you pick? You can always buy an exchange-traded fund full of them. PowerShares Financial Preferred (PGF) yields a hefty 6.9%, while PowerShares Preferred (PGX) yields around 6%. Those two funds are heavily invested in securities of financial companies, which typically offer higher yields.
"I think that financials are out of the death-row woods, but they are still in a very difficult spot," says Mr. Catalano. So if banks deteriorate, these picks may not pay off.
http://finance.yahoo.com/news/beyond-tried-true-generating-cash-040100367.html
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