Once upon a time, in a land on the shores of the Great Lakes, the people who paid taxes to their government grew tired of watching their tax bills go up and up every year. Their champion in the Governor’s office proudly signed into law a proposal the people had moved forward, through petitions. Twelve months later, the Governor reported the beleaguered taxpayers saved $492 million – in just the first year! Property owners rejoiced that their home values had increased by 8.1 percent, while their value for the purposes of tax collections rose by just 2.7 percent*.
“What a bargain! Huzzah! Huzzah!,” the people cheered. (Well, one might imagine they cheered, hard to say whether anyone actually did.)
Time passed, the people continued to cheer and celebrate, particularly those who lived in their homes for a very long time. The longer they held onto their property, the greater its value, and still their tax bills remained quite moderate. Some sold their homes, to buyers who then had to “catch up” the property taxes to the property’s value. Still, this didn’t seem to bother people much. They sold their old homes and built or bought newer, nicer homes with the profits.
These were wonderful days in this land on the lakes. Although governments frequently complained about the lack of tax revenues, property values continued to rise, families remained prosperous and times were very good, indeed.
Then one day, a dark cloud passed over the land. Bolts of lightning struck some of the places where people made their living. Hundreds of workers were driven out into the swirling winds and pouring rain. Some buildings burned to the ground; others could be repaired, but would never again employ all of the people who had worked there before the storm. One by one, families began to fall onto hard times.
At first, everyone thought the storm would end soon, but it kept raining. The lightning struck again and again, the waters in the lakes around the land began to rise up. The people grew terribly afraid, because more large businesses began to close their doors. Soon, the smaller businesses around them found they didn’t need to produce as much. They turned their workers out into the cold, hard world.
The storm raged on, worse some days than others. Homes fell into disrepair, some because of weather damage and some because people simply couldn’t afford to fix them. Those who could, moved. Those who stayed complained a lot about the weather.
When the time came for property tax bills to be paid, fate dealt the people another cruel blow. Even though their homes were now worth less than the previous year, their property taxes had actually gone UP!
“There must be some mistake,” they shouted as they pounded their fists on the desks of the Tax Calculators.
“No,” the Tax Calculators said, “No mistake at all.”
“But…. but how could this be?” the people cried.
“Well,” the Tax Calculators explained, “when you made the law to lower your tax bills, you did not include a constitutionally valid provision for your property tax bills to decrease when your properties lost value. You thought only about limiting the amount of money government took from you. You did not consider the future.”
“But we did! We passed this law to protect our financial futures!” the people argued.
“Ah, but did you consider the future of the economy? Or the future of your government?”
And the people in the Land of Magical Thinking fell silent.
* (State of Michigan press release – “Proposal A Tax Cap Saves Working Families $492 Million in 1997,” February 3, 1998).
