After another conversation with an elected Carmel official, the subject of Carmelonic debt arose.
Again, the representative of the people asked why I couldn’t swallow the Party Line. He wondered why I thought $1.4 billion was excessive.
The Party Line is available via Facebook (Jim Brainard for Carmel Mayor page, April 28, 2015 at 10:06 pm). To wit:
Mayor: “Carmel is in great shape. all the experts agree . . . My friend Ron Carter has provided the information below.”
Carter: “We have total outstanding debt principal of $598 million. (Rival Candidate) wishes to add in interest so he can drive that number up to his $1 billion figure. . . (But) debt is paid back at varying times and at varying rates. (Hence, adding interest to principal is not the way to think of debt.)
“One penny of your residential property tax rate goes to pay the debt you are responsible for as a homeowner.”
He then itemized the percentages involved in the debt repayment formula the City uses. Business property taxpayers were on the hook for 52 percent; utility rate payers, 25 percent; County allocation of taxes, 16 percent, and capital leases, 1 percent (lease payments for police and fire vehicles).
You only pay residential property tax? You don’t pay utility taxes? You didn’t pay the taxes the county returns on a pro-rated basis? Businesses don’t pass along all their costs — including taxes — in the prices you pay for goods and services?
Who is fooling whom?
In Econ. 101, we learned of the Greater Fool theory. The price of an object is not derived from its intrinsic value, but by irrational beliefs and expectations. In the Mayor-Carter Great Fool Corollary, one may pay a foolishly low price because a greater fool is paying elsewhere.
In a future blog, I will share what I’ve learned about (a) how to spot a Ponzi Scheme, (b) why people withhold information and (c) why using good words to hide bad deeds got us into big trouble in the 20th Century.
Stay tuned, Carmelats.