On Why Voting in Local Elections Really Matters More Than Presidential Elections

Last week the people of the City of Allen, the town in which I live, passed a property tax hike. This now makes the residents of our fair city among the highest taxed in the State of Texas.

How can this be? With all the talk in the media about tax rate hikes and the flaming rhetoric that comes from Tea Partiers and Conservatives, how could one of the most “Red” municipalities in the most “Red” state of the union vote to raise their own taxes?

Two main reasons.

First, this tax was specifically to fund education and the “it’s for the children” mantra makes even the staunchest Tea Partier turn mauve if not a pale blue.

Second, plain and simple it was voter apathy. This is technically known as the principle-agent problem. As you can see from the table below, less than 10 percent of registered voters turned out despite almost two weeks of early voting opportunity including a Saturday.

Registered voters           45,141    
Total voters            4,373   9.69%
For             2,645 60.48% 5.86%
Against            1,727 39.49% 3.83%

This means that is took less than six percent of the population of the city to impose a tax hike of roughly $350 per household per year on themselves and the other 94 percent of us. So much for majority rules. So much for “democracy.”

Allen Texas High School $60 Million Stadium

Worse this is not the first (nor probably the last) time this has happened. In May 2009, the voters passed a $144,000,000 bond issue for the building a new high school football stadium and a performing arts center. The results were similar:

Registered voters          42,245    
Total voters            3,736   8.84%
For             2,364 63.28% 5.60%
Against            1,349 36.11% 3.19%

In this case 2,364 people imposed a $3,400 per person liability on the rest of their fellow citizens.

Blame Congress, blame Obama, blame Bush, but look in the mirror too. I am sure this goes on in your town to some degree as well.

ET HORA LIBELLUM DELENDA EST

On Hauser’s Law and Soaking the Rich

Whenever the subject of the deficit comes up, many well-intentioned people make the suggestion that we should repeal all or some of the Bush tax cuts and that this will go a long way to at least beginning to fix the problem.

Often times this graph (or one like it) is used in support of this notion.

First, let’s keep in mind that this is the deficit, the annual shortage when one compares money spent to money collected. This is different from the national debt which measures the sum total of the deficits.

On its face, it would seem that raising taxes (or eliminating the Bush tax cuts as some prefer to say) would be a reasonable approach. The problem is that the blue line above assumes that all taxpayers would leave their behavior unchanged. This is demonstrably false through what I have come to find out is called Hauser’s Law.

What this graph clearly shows is that raising taxes actually has little to no effect on money collected as compared to GDP. Why? Because taxpayers do change their behavior. The wealthy will shift money using tax sheltering or even move it out of the country.

What is worse is that which is unseen – The slowdown of the economy that would result from this activity. So what is to be done?

There is only one viable answer – reduce the size of government.

ET HORA LIBELLUM DELENDA EST!

How NOT to handle customer consultations

Recently, a friend of mine passed along a newsletter she received from her CPA. Most of the content dealt with tips on preparing for tax filing, but one entry stood out.

Consultations versus “Quick Questions”

One of the things my clients have enjoyed over the years is relatively easy access to me for “quick” questions, by email or phone.

I noticed this past year, that sometimes I was overloaded with these “quick question” contacts during my busiest time of the year.  Even though I strongly encourage my clients to contact me for consulting during the other months for planning-type consulting, I was having to dedicate one to two hours a day replying to “quick” questions when I had 3 weeks or more of tax return work to attend to.  Handling all the “quick” questions was not happening quickly enough, and I fell even further behind.  My CPA association professional standards require me to obtain documentation for all advice given, which adds to the time needed to reply to your questions.

To help with the stress, and to be fair to those clients who have brought their tax information in to be worked on, I have decided to handle these email and phone “quick questions” a little differently this coming year.  It is an experiment, and I am open to hearing from you constructive comments on how I can better handle this area.

As announced in an earlier newsletter, starting February 1, 2011, I began handling these consultation requests more formally.  I will provide one “quick” question consultation, by email or phone for free to each returning tax client, per year.  Of course, there are limits to this, based on complexity and time involved, thus the implied definition of “quick” question.

After the one free “quick question” consultation, each additional such consultation will be provided to you for a small fee, depending on the complexity of the consultation and the length of time involved.

The minimum fee for these additional consultations will be $25 and will be due promptly.  If you choose to have me charge this fee to your credit or debit card, I will add $1 to cover part of the fees the card companies charge me for handling the transaction.

Yes, I know this is quite a change from the unlimited access to me you have enjoyed in the past, but I must get better control over my time, especially during tax season.  Your planning ahead on consulting questions, to minimize the fees I charge to you, will enable me to devote more time to tax form preparation during the busy times.

During the less busy times of the year, I will, at my discretion, waive the “quick question” consultation fees.

Please understand the limitations on my time during my busy time of year, which does not end until early May.  I will be working 70 to 80 hours a week during this time, doing my best to get your tax forms back to you as soon as possible.

One thing you might keep in mind, too, is that when you call for that “quick question”, if you talk with my receptionist or my tax assistant, and you will accept an answer from her, and she does not have to ask me the question to give you an answer, I will not consider this a consultation subject to the fee mentioned above.

What I am trying to accomplish is a reduction of the interruptions.  The preparation of your tax forms is tedious work requiring deep concentration.  Each time I have to stop to answer a phone “quick question”, even if it just takes 5 minutes, requires me to then have to regroup my thoughts and get back to the task at hand.  On a typical day in my busy time, I receive 20 to 30 calls a day.  I have a receptionist to take those calls and hopefully handle your requests.

Much is wrong with this, but let me point out a few items:

  1. The use of quotation mark around the word quick indicating that they are so-called by the client (his word) and that in his mind often these are not quick.
  2. Clearly, he uses the term client in all of its patron-benefactor denotation glory. He views my friend and others as the great unwashed, who can never understand the subtleties of his work.
  3. He acknowledges that these have become a problem, but rather that stratifying his clients (customers) and offering options, he decides to limit these connections for all.
  4. By limiting these interactions he is losing potential business. I am sure that some of these calls turn into engagements, now he will not ever get them because customers will be wondering if they should blow their one free call on something they think is insignificant.
  5. He also institutes a penalty of $1 for putting one of these on a credit card. I guess he would rather bill them in arrears and wait to be paid for at least 30 days. Why not just charge everyone $26 and call it even across the board?
  6. He insinuates that the answers giving by his receptionist and tax assistant have no value. If they answer the question then it must be unworthy. This makes them feel valued I am sure.
  7. Ultimately, he is blaming his own mismanagement of his resources on his customers.

Here is the kicker – he does not bill my friend by the hour, he fix prices all his work and as far as I know does not keep a timesheet. He could be a Trailblazer based on this. But the tyranny of time cuts deep, my friends, he is still mired in being a firm of the past.