In Arizona, the Secretary of State is charged with the responsibility of certifying signatures on petitions to put proposed measures on the ballot. But in practice, it mostly seems to fall to courts to creatively reinterpret state law to fit the particular circumstances each initiative seems to fall into.

For example, Maricopa County Superior Court Judge Edward Burke ruled the state’s publicity pamphlet could not disclose to voters that an increase of the sales tax from 5.6 percent to 6.6 percent was an increase in the tax of 17.8 percent. Judge Burke noted the mathematics are correct and would not be confused. But instead many voters are too stupid to understand such complex calculations. That’s my language, not the judge’s. But that is what his more-judicious language meant. And maybe he is right.

The fate of several initiatives will depend on rulings by judges who consider the electorate kind of dense. But then that may not be far off the mark. Will we have to dumb down these explanations to the “See Jack run. Run, Jack, run” level?

That should exclude from the ballot any initiative that deals with inherently complex matters. But not every state problem can be solved at the “Run, Jack, run” level.

Last week Secretary of State Jan Brewer’s office disqualified the proposition seeking the sales tax increase for transit projects. She said there were insufficient valid signatures. Here are the numbers: 260,000 signatures were submitted. Backers needed 153,365. But only 138,451 were certified as valid. That’s not enough. But, and here the plot thickens, under the law, if backers can demonstrate in a random sample they could reach 105 percent of the required 153,365 certifiable signatures, they get the measure on the ballot. If the sample comes in at 95 percent or less, it is disqualified. Between 95 and 105 percent, each and every signature must be checked individually.

The fact is there is not enough time for that to happen before the ballot must be printed. So we fall back on a different court that held when there is uncertainty whether the measure qualifies for the ballot, it should be put on the ballot. That virtually assures every such case will go to court for a final ruling, and that ruling will be, “Put it on the ballot.” Let those voters who are too stupid to understand the mathematics of the sales tax increase decide multi-billion dollar propositions.

It’s pretty much the same situation regarding the proposition to ban real estate transfer taxes. I’ll spare you the numbers but here are the concepts. Some legislators are muttering loudly about broadening the scope of the state’s sales tax to apply to additional items and lowering the tax rate itself. That is an idea I have promoted for years. But one of those other items turns out to include real estate transfers, a rich source of revenue that has yet to be tapped. It is one that should be off the table.

In states that have such a tax, it can grow to 1.5 percent and beyond. Considering that ad valorum taxes are collected annually on each piece of real estate during ownership, that’s a mighty heavy charge for transfer.

Having formerly practiced in a state with a transfer tax, I can tell you the way most people there avoided the tax entirely, especially on large transfers. Anticipating the tax on every transaction, they buy each separate parcel in a separate entity (partnership or corporation) and when they sell, they don’t sell the real estate at all. They sell the holding company. Zap! No transfer tax.

There are other strategies, too, but I’ll save them for a time they may be needed. Besides, these techniques are primarily for professionals. The average taxpayer is just too stupid to understand this. At least I imagine that’s what Judge Burke would hold.

Credits: AZBiz.com

This entry was posted on Tuesday, August 19th, 2008 at 1:48 pm and is filed under Mortgage & Finance, Tucson Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.