Dont delay fight on Social Security woes
News reports say Social Security benefits will go up in 2009 by 5.8 percent, the most in 25 years. Many people may applaud this as a boon to senior citizens at a time when the economy is down and purchasing power is suffering because of high prices. But where is the money going to come from? Once again, we will be digging further into the Social Security surplus (which exists only on paper) to invent more money to pay such benefits. And the real cost will again be pushed onto the present and next generation of younger wage earners.
We may think of the current recession in the economy, caused by the turbulence in the financial and housing markets, as the greatest crisis since the Great Depression. Its serious, but were fooling ourselves if we think solving this is the end of our problems. We, and all politicians, keep ignoring the elephant in the room: the looming future costs of Social Security and Medicare unless we make some fundamental and drastic changes right now. But whos got the incentive? Talking about changes in Social Security has long been the demise of sensible politicians because senior citizens vote and younger people dont.
The AARP argues along with others that "all is well" with Social Security and it only needs little tweaks to stay solvent in the future. Balderdash. The program was created with the assumptions of a small percentage of retirees compared to a large percentage of working people to pay the necessary taxes, and a far shorter life span. But for years now weve been retiring earlier, living longer and paying larger and larger seniors medical expenses from Medicare. It cant survive without becoming a crushing burden on our children and grandchildren, but we do nothing, because we dont want to be the group to "lose" anything.
Lower assessments arent less taxes
Chris Heicheles letter on Oct. 22 indicates understandable frustration with the real estate property tax assessment system, which seems to be out of sync with real market values. Every year the assessors offices adjust assessed values broadly and then go on to publish a general assessment every four years (quadrennial). The quadrennial is based on data compiled during the cycle and attempts to adjust assessment more accurately by neighborhood. While most significant changes occur at the quadrennial, an assessor can adjust values during the interim years as well if a particular property changes in value significantly. An appeal to lower or raise a propertys assessed value can also be filed each year by a property owner or taxing district etc. If you feel that the normal assessment process is not reacting adequately to volatile market conditions, you can consider filing an appeal. You will have to be able to prove the current assessment is not accurate based on a more timely evaluation.
If total property value within a taxing district goes down because of reduced market values, property tax revenue in that district does not go down with them, and Illinois tax cap law has no relationship to assessed values. The tax cap law only regulates the amount a taxing district can levy. If assessed values eventually fall, the tax rate multipliers will simply be raised to generate the same revenue and then raised even higher to permit general additional new revenue within the constraints of the tax cap law. This means taxing districts can generally raise their levy up to the lesser of 5 percent or the Consumer Price Index plus approved referendums.
If youre hoping taxes will go down because your property is worth less now, it wont. Only restraint by the taxing districts in these troubled times or increased assessment formulas on nonresidential (commercial/industrial) properties will lower homeowners tax bills.
There are two fundamental issues to debate in real estate property taxation: the size of the tax burden (levies) and the fairness of the assessment process that distributes the burden. …