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Arizona Considers Selling Capitol Buildings 301

Things are so bad in Arizona that legislators are considering selling the House and Senate buildings where they've met and worked for more than 50 years. Dozens of other state properties may also be sold. The plan is to sell the properties and then lease them back over several years before assuming ownership again. "We've mortgaged the legislative halls," said an exasperated state Rep. Steve Yarbrough, a Chandler Republican. "That just tells you how extraordinary the times are. To me, it's something we're going to have to do no matter how much we find it undesirable." I bet they could get a great price on the Grand Canyon.


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Arizona Considers Selling Capitol Buildings

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  • by Uberbah ( 647458 ) on Thursday July 30, 2009 @04:03PM (#28887111)

    Low taxes can have high costs.

    • Tax and spend liberals (both R and D) has even higher costs.

      Here's a novel concept .... LIMIT GOVERNMENT SPENDING.

      Lets start cutting all the crap out of budgets, removing social programs that don't work, and get back to basics. How about stop stupid feel good programs that do nothing but create stupid rules that cost nothing but money on things that don't work.

      Yeah, times are tough. TOUGH SHIT. We can't afford all the pretty shiny programs when life was easier. Time is now to TIGHTEN our belts and get rid o

      • by abigor ( 540274 ) on Thursday July 30, 2009 @04:31PM (#28887645)

        So I take it you've analysed Arizona's budget and know for a fact that excessive government spending is a problem? I'd be interested in hearing your analysis of precisely what should be cut.

        • Re: (Score:3, Insightful)

          by Vancorps ( 746090 )

          Fixed red light cameras should be cut. They consistently are money losers here in AZ which is why they get installed and last about year before being taken down. All that trenching for nothing. Then of course they can't even send the tickets to the right court which was great when I got a ticket since the judge threw it out for going to the wrong court.

          Beyond that there really isn't a lot of spending as far as I can tell. I could be wrong though. The issue appears to be a simple need to increase taxes and

          • Wow, you went to court? I've got 3 tickets sitting on my desk waiting for someone to actually serve them to me.

        • Yeah, if you only you could do that: http://www.goldwaterinstitute.org/article/2399 [goldwaterinstitute.org]

          Here's somewhere to start though:

          ADOT spends 4 million a year on Public Relations consultants.

          Why does the Arizona Department of Transportation need to spend 4 Million dollars a year on Public Relations?

        • I already told you where to cut. We lived for THOUSANDS of years without most of the crap we now have. We can do without it. Yes, it sucks for some people.

          Life isn't fair, and it isn't fair trying to make life fair for everyone. That is the lie of Liberalism (D and R versions) that we can "level the playing field" and make things "fair" for everyone.


          So, lets stop pretending life is fair, and that we can make it fair. We can't, we shouldn't even try.

      • Lets start cutting all the crap out of budgets, removing social programs that don't work...

        And who gets to decide what is/isn't working and whether the stuff that works is worthwhile?

        • by hey! ( 33014 )

          Well, *you* do. Whether you can make your decision stick depends on convincing enough other voters of your position.

          Don't like how your tax dollars are spent? Well, who did you vote for? Did you volunteer or send money? Did you canvass your neighbors?

          The dollar value of your outrage's justification is equal to the value of the effort and money you put in to shift policy on this issue.

          I'm sorry, I don't mean to take this out on you personally. I just *hate* the meme that we're helpless victims, because

      • How about stop stupid feel good programs that do nothing but create stupid rules that cost nothing but money on things that don't work.

        Is there a list of "stupid feel good programs" that everyone agrees are wastes of money? Do you happen to have any examples? While it's pretty obvious the budget needs to get cut, I have no idea what works and what doesn't in my own state, let alone arizona.

        Just telling the government "Reduce the budget" is a little like telling a child "be good." Good message, relieves some stress, but they need concrete examples or else it's going to be ineffective. If you tell the government to cut the budget and don

      • by hey! ( 33014 )

        I think one must make distinctions between capital and non-capital spending.

        Think education is too expensive? Try ignorance and you'll find out what "expensive" means.

        • Think education is too expensive? Try ignorance and you'll find out what "expensive" means.

          What if we are trying both? Higher cost of education and higher level of ignorance (through lower academic accomplishment)?

      • by Omestes ( 471991 )

        Nice rant, but it really has nothing to do with Arizona's problems. They have decided to cut their budget, but the "social programs that don't work" that they identified all happen to be public schools, universities, and health care (which does work at least in this implementation). Which is rather odd, since we currently are at the bottom (or near it) as far as education goes.

        The problem isn't "liberal" spending, if you'd take a couple of seconds to research the issue in AZ, you'd realize that we are one

      • Yeah, some people might get hurt in the process, but if we continue going like we currently are, we are hurting future generations. People are already getting hurt, we shouldn't be passing that crap on to our children.

        John Maynard Keyes [wikipedia.org] would like to [mint.com] have a word with you. [wikipedia.org]

    • The State of Arizona's budget for 2009 is $55 billion dollars. The shortfall is about a couple of billion. If all the state did was to adopt the budget from 2006, which was 42.7 billion dollars, me thinks the state would be in the black and by a pretty penny.

    • Yeah, it gives them incentive to trim unnecessary crap from the budget. Although there is such a thing as going too extreme, I'd rather my state be selling off it's capitol buildings than paying 10 people to 'supervise' 3 guys fixing a culvert under the road.
    • Low taxes can have high costs.

      So can high spendings.

  • by Seumas ( 6865 ) on Thursday July 30, 2009 @04:03PM (#28887113)

    Arizona's actual long-term plan is to sell all of their Capitol buildings and replace them with Lowercase buildings and pocketing the difference in caost.

  • by girlintraining ( 1395911 ) on Thursday July 30, 2009 @04:06PM (#28887161)

    Is this like monopoly? I tend to lose not long after I have to start mortgaging my properties to the bank.

    • Tish and piffle. First thing you do once you've got a half-decent set is mortgage everything you can't use and buy as many houses for your set as you can possibly manage.

    • Re: (Score:3, Insightful)

      by Matheus ( 586080 )

      What happens if whomever they sell the buildings to decides not to lease back? Or better yet evicts them for failing to pay rent?

      I think a capital rotunda would make a fantastic music venue... how much are they asking? :)

  • Really? (Score:3, Interesting)

    by Sj0 ( 472011 ) on Thursday July 30, 2009 @04:07PM (#28887165) Journal

    I've consistently said the same thing: Don't cut taxes, cut spending. Just as consistently, my thoughts have been shot down.

    Well here's the final result of irresponsible fiscal policies. Congrats, the government now belongs to the bank.

    With some prudence during the boom times, maybe we wouldn't be seeing so many issues during the bust? I know it's hard to imagine, but some governments paid down debt during the boom, rather than cutting taxes to unsustainable levels, only to be laughed at. Who's laughing now?

    • Re:Really? (Score:5, Informative)

      by Delwin ( 599872 ) * on Thursday July 30, 2009 @04:14PM (#28887273)
      You don't live in Arizona do you? They've already cut everything they can. There's constitutional restrictions on what they can touch (direct voter mandates cannot be cut) and there's a lot of essentials that cutting will cripple the future of the state if they're cut any farther than they already have been (Education being the most commonly talked about one).

      They're out of things to cut and any attempt to raise taxes has been shot out of the water by the legislature. The final compromise sends the tax hike to the voters so the legislature doesn't get their political hands dirty with it.

      Should they have saved during the boom more than they did? Yes. Did Arizona save a lot during the boom? Actually yes it did but all of that savings only covered last year's deficit. Now savings is depleted and current tax revenues have fallen by double digit percentages but the population hasn't fallen by much (most areas are actually still growing) so basic services that the government is responsible for still need to be covered.

      As is a lot of the state parks are now shut down because there's no money to pay for them. So don't knock the government here for doing everything in their power to fix the problem. At least we haven't had to send out IOU's like California yet.
      • by Sj0 ( 472011 )

        Then the truth of the matter is obvious: They need to raise taxes if they've cut everything, or they need to amend their constitution to cut more. It's only a two number equation. This isn't hard stuff.

        • by Titoxd ( 1116095 )
          But we're in the land where supply-side economics is king. Raising taxes is BLASPHEMY! :(
      • You can always cut elected official's salaries. I'm not sure that I've ever seen one that I thought was reasonable.
      • Don't think so... (Score:2, Insightful)

        by tjstork ( 137384 )

        You don't live in Arizona do you? They've already cut everything they can.

        I doubt this. Have a look at Wikipedia

        http://sunshinereview.org/index.php/Arizona_state_budget [sunshinereview.org]

        In 2009 the State Budget is $55 billion dollars. In 2000, the State Budget was less than half of that. Did our wages double from 2000 to 2009? If not, then why the hell did spending? Every state that is in red ink could easily avert its fiscal crisis if all it did was revert to a 2004 budget... We're not even talking 4 years ago...


        • Re:Don't think so... (Score:5, Interesting)

          by Sir_Sri ( 199544 ) on Thursday July 30, 2009 @05:46PM (#28888877)

          between 2000 and 2008 the population went up apparently 26.7% (http://quickfacts.census.gov/qfd/states/04000.html) and nationally inflation from 2000 - 2008 has been (http://www.westegg.com/inflation/) 23.8%. put together (multiplicitively) they add up to a 56% increase in cost to provide exactly the same services as in 2000 assuming everything increased in cost with inflation since then (which it might not). Since 2000 GSP has grown from 158 billion to 257 billion, and the budget went from 17% of gsp to 20%. (27 - 50 billion dollars). That doesn't seem significantly out of order to me. If you're ideologically pegged to the idea that state governments should never exceed 17% of gsp then I guess you're reallly angry, but a difference of 6 billion dollars (44 vs 50) without any indication what that money is going for is a bit unfair. I'm not from, nor have I ever been to arizona and I've spent about 2 minutes studying their budget, so I have no sense of what's new or different since 2000.

          To actually balance the budget they could, by your reasoning only go back to last years budge, and be fine.

            On 55 billion in spending to be 1.6 billion behind in these times doesn't seem a huge problem. They're concerned with a so called 'general fund' which is 10 billion dollars which they directly control and 1.6 billion out of that is inconvenient but again, doesn't strike me as as catastrophic as they seem to be presenting things. 1.6 billion dollars would equate to 0.6% tax on everything - or a 3% increase in taxation, however you want to look at it.

          Political theatre doesn't necessarily equate to any fundamentally serious problem, other than general incompetence on the part of politicians and their unwillingness to make minor changes.... which isn't exactly news.

          California's situation, which is a 100 billion budget and 60 billion in revenue is somewhat more serious, by just about any measure. I live in Ontario (Canada), we have a budget of about 100 billion canadian dollars with a projected revenue of about 95 billion, so the situation here isn't particularly dire.

        • Okay, I'm looking at your link--all of the following is per your own source of information (which appears to be affiliated with the National Taxpayer's Union, a radical anti-tax, anti-government advocacy group).

          6 state agencies account for 91 percent of state spending: K-12 education 42 percent, Medicaid program 14 percent, universities 11 percent, corrections 10 percent, department of economic security 8 percent, department of health services 6 percent, and other 9 percent.

          (In case anyone was wondering, the Department of Economic Security [azdes.gov] would be Child Welfare Services (food for starving kids), Child Protective Services (foster care), and employment/unemployment services (which is where you go when you get laid off, which I hear has been happening to a lot of people l

      • by Luthair ( 847766 )
        One of the posts in the responses on the linked site (which I don't recommend anyone read, its a cesspool) mentions that there is also a 680 million tax cut in the budget as well.
    • I've consistently said the same thing: Don't cut taxes, cut spending. Just as consistently, my thoughts have been shot down.

      I don't know...

      Cutting spending in a deflationary crisis might be an economically bad idea for local jobs and results in the whole deflationary death cycle [wikipedia.org].

      The state should sell municipal bonds [wikipedia.org] if it short on money and citizens take advantage of federally tax free bond income by giving the state loans out of their own pocket.

      That way people with extra money to spend can finance the sta

    • Re: (Score:3, Interesting)

      by timeOday ( 582209 )

      I've consistently said the same thing: Don't cut taxes, cut spending. Just as consistently, my thoughts have been shot down.

      You can't necessarily increase your profits just by minimizing expenses. If that were true, the only viable business strategy would be selling all your assets for a quick cash-out. Government is not entirely different. Look at Detroit, the taxes collected are far lower than necessary to support the crumbling infrastructure. Has that saved the city?

      Certain people keep talking ab

      • by Sj0 ( 472011 )

        That's your problem: You're imagining that the government can actually save anything or anyone. All they can do is either take money from our pockets and give it to someone else, or inflate the currency. The former doesn't result in a net increase in spending unless you believe people would put the trillions collected from bonds or taxes under their mattress, and the latter doesn't result in an increase in spending unless you ignore that existing investments and savings accounts have their value drained fro

        • Re: (Score:3, Insightful)

          by timeOday ( 582209 )
          Canada is weathering the downturn much better because they have a better regulation [brookings.edu] of the financial sector, thus the wheelers and dealers there were not allowed to over-leverage to ridiculous proportions in a drunken fit of greed.
  • ...in yesterday's post on Mike Shedlock's blog [blogspot.com]. He makes a telling point: "Bear in mind, you can only sell the Capital Building once. Then what? Is anyone looking ahead?"

    • by Delwin ( 599872 ) *
      Mostly they're looking ahead to 2010 and 2011 and hoping we pull out of the recession so they can buy it back.
    • Can they? Two words: Eminent Domain [wikipedia.org]. Of course, that might make potential future buyers less likely to buy without some promise that the building will not be put under ED without a real reason ... but they can have the money for selling the building and have the building too.
      • Re: (Score:2, Informative)

        by TroyM ( 956558 )

        Under Eminent Domain, the government still has to pay fair market value for what they take.

    • They are betting on the recession ending and tax revenues improving in the future. It's a fairly reasonable bet. And even if they lose, they can just buy their capital back from the bank at the foreclosure auction. It's not like there's going to be much competition in terms of bidders for the Arizona State Capital building.

  • A bank needs a bailout from the government.

    The government needs money to pay them.

    The government mortgages their property to get money from a bank.

    The government gives the money to the bank.

    Who wins?

    • by flitty ( 981864 )

      A bank needs a bailout from the Federal government.

      The Arizona government needs money.

      The Arizona government mortgages their property to get money from a bank.

      The Arizona government gives the money to the bank.

      Who wins?.

      Well, looks Like Banks win twice, Arizona wins once, and Federal government loses (if the funds are not repaid).
      Looks like the Feds should just lend the money to AZ directly, with repayment due when the recession turns around, with minor interest to cover the cost of lending.

  • ... and other small-goverment-is-good groups shoudl buy the buildings and then bulldoze them. They can finally control the size of government, if only in Arizona.

  • by diskofish ( 1037768 ) on Thursday July 30, 2009 @04:17PM (#28887331)
    This is the worst I've heard of yet. How about they try to fix the problem instead of a temporary fix? That and I don't see how this is actually going to save any money. They'll incur the cost of moving everything to a new location, rents at the new location...etc etc etc.
  • by rbanffy ( 584143 ) on Thursday July 30, 2009 @04:17PM (#28887335) Homepage Journal

    If you already can buy the politicians who work there, what could be the problem of being able to buy the building itself?

  • by religious freak ( 1005821 ) on Thursday July 30, 2009 @04:19PM (#28887373)
    On a per capita basis, Arizona is worse off than California. The cause is due to a confluence of factors, including not saving enough for the bad times, taxes being too low or spending being too high, having such a growth oriented economy, etc.

    But there are two items which I am CONVINCED are major factors as well.
    1) Term limits: They suck. I used to support them, but I was wrong. Term limits result in a legislature that doesn't know WTF it's doing at any time. There is no institutional memory, and once someone understands the complex process of creating and passing legislation - they get the boot. Additionally, because no one exactly knows their jobs, term limits result in a weak branch of government, so the executive tends to dominate. This is not what our respective state constitutions intended. I wish people would put two and two together on this.

    2) Illegal alien "crackdown" and employer sanctions: AZ is suffering a major real estate crisis. The crisis is for reasons obvious to anyone, but a contributing factor for our crappy economy and crappy real estate was the crack down on illegal aliens. Folks don't realize that these people rent and spend here too (often times without the societal expense us "real people" tend to cause society). When you have sweeps, a lack of employment and a general sense of animosity towards those who (in my view) are major contributors to society, they move one state over (they're not moving back to Mexico). I wish people would understand this point too.

    Certainly, the overall economic factors play a very large role, but AZ has gotten itself in a big mess all by itself...
    • by wjousts ( 1529427 ) on Thursday July 30, 2009 @04:31PM (#28887639)

      1) Term limits: They suck. I used to support them, but I was wrong. Term limits result in a legislature that doesn't know WTF it's doing at any time. There is no institutional memory, and once someone understands the complex process of creating and passing legislation - they get the boot. Additionally, because no one exactly knows their jobs, term limits result in a weak branch of government, so the executive tends to dominate. This is not what our respective state constitutions intended. I wish people would put two and two together on this.

      Not only that, but they pretty much guarantee that whoever is in government now, is planning for their career after government. They really have no choice with term limits.

    • by Titoxd ( 1116095 )
      I get your point, but do you really want these people [youtube.com] to stick around any longer than the bare minimum?
    • Re: (Score:3, Insightful)

      You raise some interesting points. I have a friendly disagreement with you on these to some extent...regarding term limits, if it takes more than two terms for a representative to thoroughly understand how to contribute to running a state government then perhaps the state government is already too complex, or there is no incentive to make state programs efficient. I imagine it is even worse in that both of these cases are true. With regards to illegal alien crackdown, let me first commend you for using t
    • First, it always is spending that is too high. Politicians make promise after promise because they are not truly responsible for the costs they impose on their constituents. I know some will say that is not true because we can vote them out, but we don't. Just like schools, its the other guy's politician that is bad; theirs is great. Yet while we have politicians clamor to hold corporate executives responsible for the slightest expenditure or such they allow no such hold on themselves. Throw in their t

      • Re: (Score:3, Insightful)

        by QuoteMstr ( 55051 )

        First, it always is spending that is too high.

        Which naturally leads to tax cuts to "starve the beast".

        Budget deficit? Tax cuts.
        Budget surplus? Tax cuts.
        War too expensive? Tax cuts.
        Poverty? Tax cuts.
        Worsening education? Tax cuts.
        Rising crime? Tax cuts.
        Declining crime? Tax cuts.
        Pollution? Tax cuts.

        Sorry, but I prefer to live in a state with a functioning government that can actually provide for its citizens. Take a hike and go live in Somalia if you're so opposed to civilization.

    • Re: (Score:3, Insightful)

      by jwhitener ( 198343 )

      "Term limits result in a legislature that doesn't know WTF it's doing at any time. "

      How often is the turnover in AZ? Oregon and Washington had senators/congressmen that were basically lifers in DC.

      If the people like you, you stay in. Term limits are in place to allow the people to vote out crappy legislators on a regular basis, and to hopefully provide a steady stream of new ideas.

      Congressmen/Senators do not need to know how to write law. The need to know how to express the needs and views of their const

  • by JamJam ( 785046 ) on Thursday July 30, 2009 @04:21PM (#28887401)
    So what if I buy one of these properties then break the tenants lease (pay a financial penalty or something) then I'd outright own the property? Would the building be zoned commercial or could I make one of these buildings into my house? or bed & breakfast? (which would great if I bought a jail)

    Just thinking outside the box here...
    • by religious freak ( 1005821 ) on Thursday July 30, 2009 @04:28PM (#28887545)
      I'm sure the covenants of any contract would keep the owner's options quite slim. Probably a NNN lease where the ownership is almost a formality. There's no way you could do such a thing as you suggest without landing in court for a very long time.

      Unlike California, Arizona cannot issue state debt (I believe it may even be in the constitution), so it looks like they're looking for a back-end deal to issue debt without violating state laws. It may not even be such a terrible idea. Interest rates (cap rates, more specifically) on real property for a AAA tenant are very reasonable. If they could incur a small amount of debt constitutionally, and pay a reasonable rate for it, pay it off in the future, it's not entirely bad. I'm not saying it's good, but that's where AZ is at right now.
  • At least State governments are restricted in how much damage they can do in being unable to run long-term deficits. Mischievous government should be forced into foreclosure just as the imprudent individual. It will be a great day when the Capitol and White House are on the auction block in a desperate attempt to prevent the Federal Government from entering default.
  • by Volda ( 1113105 ) on Thursday July 30, 2009 @04:43PM (#28887833)
    Im confused here... If they sell the buildings then lease them from the new owners do they not have to pay rent? Then in a few years when the economy is better wont they have to buy it back for more then they sold it for? Real estate generally increases in value not decreases. It would make the whole deal a loss for the state then wouldnt it? I see no way that this would help out with their yearly budget except for the year they sell it. After that its only going to be a net loss.

    It seems to me this sounds like a bs accounting scheme. Kinda similiar how a few states say its cheaper to keep a murderer in prison for life then it is to execute him within a few years. Its looks great in the short term but in the long run it costs much more.

    It just sounds really stupid to me. I can understand trying to get some money to make ends meet but this whole deal makes me scratch my head.
    • by hey! ( 33014 ) on Thursday July 30, 2009 @05:22PM (#28888509) Homepage Journal

      OK, answers to your question:

      (1) Yes, they do have to pay rent. Where will the rent come from? From the proceeds of selling the building.

      (2) Yes, they want to buy it back, they will pay more for it than they got. The rent money they'll have sent will be gone forever.

      (3) Yes, the state will end up losing money on this.

      (4) No, it is not a BS accounting scheme, it's actually quite straightforward. It might be a bad financial decision. Or it might not.

      You see, this is not about saving money. It's about having enough cash on hand to pay the bills. From a financial standpoint, it's a lot like taking a loan. Does it make sense to take a loan to buy a car, even though you end up spending a *lot* more? Sometimes yes, sometimes no. If you don't need the car, it doesn't make sense. If you have the cash on hand to buy the car without risking running out, it doesn't make sense to take the loan unless you've got really *excellent* investments. If you don't have the cash to buy a car, and you *need* a car to get a job, then the loan makes sense.

      Does this make sense for a state? Well, the deal is you get cash up front but in the end pay a fee for the use of that cash, just like a loan. The alternative is to either (a) obtain more cash or (b) eliminate current cash outlays. In other words, raise taxes or cut spending.

      If you raise taxes, you may delay the economic recovery in your state as businesses choose to relocate to places with lower taxes.

      If you cut spending, you may store up problems like bridges that need to be replaced because they hadn't been painted; an increasingly ignorant and unemployable population; greater costs of fire, crime, and public health crises which are borne in an arbitrary way by random population members, which *also* cause businesses and people to relocate.

      Now if you can find the cash you need by identifying *wasteful spending* that accomplishes absolutely nothing, then hallelujah! On the other hand, reducing spending on *useful* things isn't always a financial bargain.

  • by SpaghettiPattern ( 609814 ) on Thursday July 30, 2009 @04:54PM (#28888043)
    Do the buildings go "ping"?

    If you're new on /., go to 3:00 of this [youtube.com]. Don't worry, you'll get there some day in a distant future.
  • The heights of stupidity people will go just to avoid raising taxes.
  • by MarkWatson ( 189759 ) on Thursday July 30, 2009 @05:09PM (#28888275) Homepage

    The economy is in poor shape now, but will probably get much, much worse in the coming years (see today's poorly performing 5 year treasury bond sales, an indicator that foreign banks and investors don't want to invest in us, even with a higher "tail" interest rates.). What makes our state legislators think that they will have more funds in a few years to buy these properties back?

    It is in no one's interest that the US economy crash and burn, and that is why the oil rich countries, and China, Russia, etc. appear to be cooperating on "gently" moving the world to a "basket of currencies" rather than use the dollar as the main international exchange currency - they don't want us to crash and burn and take them with us. A slow and gradual process is the best that we can probably hope for.

    How can the USA cooperate? For one thing, how about reducing federal, state, and local expenditures by 25% (OK, I just made up that amount, but it sounds about right).

    Painful? You bet. Government workers will have salaries and benefits reduced, as will the general population. Deals with labor unions will be broken. Benefits form the ponzy scheme known as social security will be cut back.

    Corruption needs to be nipped. As a starter, how about a tax on financial transactions that do not involve real goods and services: apply a 1% tax to hedge fund investment transactions, etc. Slow down the non-productive use of money.

    Bush, Obama, and Congress have already proven themselves to be firmly in the pockets of corporations and their lobbyists - that will not change. Why should people who get to make the rules be fair with the rest of us?

    • As a starter, how about a tax on financial transactions that do not involve real goods and services: apply a 1% tax to hedge fund investment transactions, etc. Slow down the non-productive use of money.

      I'm sorry, but where do you think that money goes?

      That's how corporations are able to raise capital to expand their businesses. By levying a tax on the transfer of money from one investment to another, all you're doing is incentivizing people to keep their money in less productive concerns. How is that supposed to help the economy?

  • by MartinSchou ( 1360093 ) on Thursday July 30, 2009 @05:48PM (#28888915)

    In Denmark the former tax minister Peter Brixtofte [wikipedia.org] was mayor in the Farum municipality [wikipedia.org] (he's apparently infamous enough to get his own Wiki page in English).

    He implemented a similar scheme in Denmark (now called "Farummodellen"). If we ignore the fact that this was and still is against the law in Denmark, Farum municipality has ended up with the worst economy in any municipality in the country, despite the fact that it used to be one of the richest and most prosperous ones.

    To give you an idea of the state it left them in:
    In Denmark we have several types of taxes, the municipalities set two types: Municipaly/council tax and property tax. All non-calculated numbers below taken from here [noegletal.dk]
    And compare these two for two fairly close and I think fairly comparable municipalities:
    In 1995 it was 17.30 and 0.60 percent respectively for Farum (sell and lease back)
    In 1995 it was 19.20 and 0.88 percent respectively for Lyngby Taarbæk

    In 2005 it was 22.80 and 1.80 percent respectively for Farum (sell and lease back) (total increase of 5.94%)
    In 2005 it was 19.90 and 0.83 percent respectively for Lyngby Taarbæk (total increase of 0.54%)

    Taxes doesn't tell the whole story of course. So let's look at expenses for the two, calculated pr resident:
    In 1995 it was (Euro)4,256 for 17,835 residents in Farum (sell and lease back)
    In 1995 it was (Euro)4,526 for 49,578 residents in Lyngby Taarbæk

    In 2005 it was (Euro)8,949 for 18,662 residents in Farum (sell and lease back)
    In 2005 it was (Euro)7,572 for 51,611 residents in Lyngby Taarbæk

    So, an increase in expenses of 110% and an increase of 4.6% of the population for the sell and lease back municipality
    And, an increase in expenses of 67% and an increase of 4.1% of the population for the other one

    Now, I'll be honest and say that economics is tricky, and it doesn't get easier when you factor in Brixtofte's convictions for corruption and criminal breach of trust and the still unresolved main case against him partly involving the sale and lease back issues, but all in all it really really didn't pan out in Farum, despite the municipality getting a huge (Euro)268M subsidy paid out over 15 years from the government.

    Even without looking elsewhere, think of it like this:

    Government owned: expenses = Maintenance_g
    Privately owned: expenses = Maintenance_p + profit

    The only way that (maintenance_p + profit) < (maintenance_g) is if maintenance_p << maintenance_g, in which case you'll either end up with a horribly maintained building, possibly unsuitable for people to work in, OR you're paying low level government employees way too much. Last I checked that the latter has never been the case. When's the last time you heard someone say "I'll get a nice cozy government job - it pays a lot better"?

  • by xant ( 99438 ) on Thursday July 30, 2009 @07:17PM (#28890087) Homepage

    Who'd want to buy the house where the economy of Arizona died? I heard it was murdered.

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