Activist rips into Denver City Council for pursuing “tax on the poor”

By | August 7th, 2012

At a recent Denver City Council Government and Finance Committee hearing, Chairman Seku of the Black Star Action Movement of Denver ripped into city officials for considering a potential property tax increase by working around the Taxpayer Bill of Rights (TABOR), noting the effect it would have on the city’s renters, not just property owners…

“We’re not for TABOR. We’re not against TABOR. We represent poor, working poor and homeless people…See, none of that has anything to do with why we’re here. This is a tax on the poor. You give back the money to the property owners, who I pay rent [to]; my rent goes up. ‘Cause, see them people…who own my building is a corporation. They ain’t about losing no money. And if they lose some money, and they give it back, then they’re gonna make us pay for it, it’s just that simple. Now I know when y’all came up with this, you didn’t have no poor people in the room to explain it to you, otherwise you would have nipped this in the bud.”

As we noted previously, Denver City Council is considering a proposal by Mayor Michael Hancock that would ask taxpayers in November to approve the city keeping excess residential property tax revenues - an estimated $44 million in 2013 and much more in subsequent years - through a so-called “De-Brucing” of TABOR.

In Denver, residential rental property is taxed at the same rate as primary residences, so taxes would effectively go up on apartments and rental properties, too. In such a market, it would prove easy to pass the additional property tax on to renters.

Right now, rents are rising at the fastest rate in 20 years, a result of tight rental market with a vacancy rate of 4.8%, the lowest since 2001.  Anecdotal evidence confirms this. A friend of mine who owns rental properties in town posted a “for rent” notice, with a rent slightly higher than she had asked the previous year. She was flooded with inquiries, many of the, “I hope it’s still available,” variety.

Seku on July 25 was reflecting a very simple economic and business truth: if there’s little elasticity in demand, and little elasticity in supply, then additional costs get passed on to consumers.

For property owners, or renters, to support this ballot initiative would require voting against their self-interest. Supporters may hope renters will believe that the tax falls on owners, and will believe that they are getting someone else to pay for city services. And the supporters may hope that property owners will forget that rental markets aren’t always this tight, and will support the hike believing that they are getting someone else to pay for city services.

City Council already implicitly acknowledged that renters indirectly pay property tax by agreeing to double a credit available to low-income property-owners and renters as part of this bill.

They can’t both be right, of course. But least right of all is the City Council.