7/28 N&O

[Jackie]

John Shaw offers a suggestion on the Senate version of HB 1889 in today's opinion page (http://www.newsobserver.com/print/monday/opinion/story/1156282.html).

Jackie

[johnshaw]

Jackie,
Thanks for pointing out my letter.
One problem with property tax it is based not on a person’s ability to pay but on the potential value of property even when the owner has no plans to sell the property. For most of us who own homes in developed subdivisions the tax value of our property is directly related to the value to us.

However, for some owners of rural or semi-rural property the highest and best use would assume that the owner covers the land with houses. If the owner wants to keep the land natural and undeveloped, he or she must still pay tax based on the potential value as if the land were developed.

This is very much like basing income tax on what a person could be earning, rather than what the person is really earning. For example, requiring a retired professional to pay income tax on the earnings that person could be making if not retired.

HB1889, introduced by Rep. Pricey Harrison is a step in the right direction. It allows certain lands that are valuable wildlife habitat to be priced on the “present use”, that is, based on its value if kept in the natural state. This will

However, modifications in the Senate this year severely limited the ability of a landowner to join the program. For example, a tract of land must be at least 20 acres in size, as opposed to the 10 acre minimum in the bill as introduced by Rep. Harrison and passed by the house.


I hope that in the next session the minimum size limits of land that can be protected by the wildlife program can be reduced.

John

[Brent]

Good letter, John!



This is very much like basing income tax on what a person could be earning, rather than what the person is really earning. For example, requiring a retired professional to pay income tax on the earnings that person could be making if not retired.

I think it's very much like -- or arguably, actually *IS* -- realized vs. unrealized capital gains.

One doesn't pay income taxes on unrealized capital gains -- for example, if your stock holdings increase in value, you pay taxes only when you sell the stock (realize the gain).

I agree that the same consideration ought to be given to land that the owner wishes to preserve in its present use.

[d4vendel]

One doesn't pay income taxes on unrealized capital gains -- for example, if your stock holdings increase in value, you pay taxes only when you sell the stock (realize the gain).



A point of clarification. This is only true of IRAs, 401Ks, 403bs, and other so governed retirement accounts.

Regular investment accounts get hit for taxes each year on capital gains distributions if your fund does such distributions. Reinvestment of cap gain distributions does not matter. You still pay the tax.

Now back to our thread already in progress...

Nice letter John!

[johnshaw]

One doesn't pay income taxes on unrealized capital gains -- for example, if your stock holdings increase in value, you pay taxes only when you sell the stock (realize the gain).



A point of clarification. This is only true of IRAs, 401Ks, 403bs, and other so governed retirement accounts.

Regular investment accounts get hit for taxes each year on capital gains distributions if your fund does such distributions. Reinvestment of cap gain distributions does not matter. You still pay the tax.

You do not have to pay capital gains tax on individual stocks until you sell those stocks. If you have money in a mutual fund, there is an assumption that the fund distributes the capital gains when they sell individual stocks in the fund, and you pay capital gains on those distributions. Some funds have very low turnover of stocks within those funds, so the capital gains distribution of the funds is very low.



Nice letter John!

Thanks Dave and Brent

[d4vendel]

John's clarification on the clarification is quite correct. I dumped most of my individual stocks years ago and have most everything in mutual funds, so I tend to think that way.

That's why we pay John the big bucks! :)

[johnshaw]

That's why we pay John the big bucks! :)

I had better make sure you have the correct address. My big buck checks aren't arriving.:laughing6: