Let us suppose that the Madison Central school board lacks the political will to advocate at the state level for an income tax. This summer Superintendent Frank Palleria said as much to me, expressing the oft-cited line that the income tax is a good idea but that South Dakotans will never vote for one. (Again, if everyone says that, who's left to voteagainst it?) Comments from board member Mark Hawkes in the Tuesday Madison Daily Leader indicate that attitude persists: he says that the board does not think the legislature will do anything to change the funding formula to help schools in the coming session, and he expresses no initiative to go to Pierre and push for change. The board is stuck in the same old rut.
If we must have a property tax increase, perhaps the board could still be a bit creative about it. Perhaps the board could still find a way to increase the district's revenue without hitting the lower-income people of this community. There are obviously people in the community who can afford higher taxes: just take a look at the huge houses going up around Lake Madison. Perhaps the board could vote for a property tax increase that would target just those big builders.
Specifically, let's impose a "luxury property tax." We could pick an arbitrary value, say $250,000. Every property valued below that amount would see its property tax levy remain the same. However, we would impose a higher levy for every thousand dollars above that rate. Right now, the residential property tax levy is $14.77 per $1000 value. We could tax the first $250,000 of a house's value at that rate. Above that value, we could levy $24.77 per $1000.
So take a $400,000 house. On the first $250,000 of that value, the owner would pay $14.77x250 = $3692.50. On the remaining $150,000 of the house's value, the owner would pay $24.77x150 = $3715.50. The total assessment: $7408.
My numbers are not set in stone. We can certainly debate just what value constitutes a reasonable starting point for "luxury property" and just how much to increase the levy for those higher values. Perhaps instead of a dollar figure, we could use residence status: perhaps we apply the tax only to second homes and vacation homes and exempt primary residences. Perhaps we could apply the tax strictly to new construction, thus encouraging people to renovate and preventing urban sprawl.
Whatever scheme we would choose, a "luxury property tax" would buffer people with older, smaller homes, like retirees who don't have the energy or time to clean a giant house or lower-income workers who simply can't afford new, sprawling digs, from the increased tax burden the school district wants to impose. The people who can spring for an extra 1000 square feet of living space can likely spring for increased property tax as well. Such a luxury property tax rate still isn't the ideal -- ultimately, we should move toward an income tax that most directly addresses the issue of taxing people according to their ability to pay. But a luxury property tax would provide at least a little breathing room for lower-income property holders until we develop the political will to completely reform the state tax system.
income tax no.
ReplyDeletetaxing according to the ability to pay (to each according to their need / from each...) immoral
sales tax/ consumption tax: yes
So is it any more moral to tax people according to their needs? Why tax the bread a person buys to survive? Would it be acceptable only to tax consumption above a certain level of necessary purchases? Tax only the amount food purchased beyond the basic nutritional requirements? Tax restaurant purchases but not grocery store purchases? Or with property, exempt 500 square feet of living space from each person's property tax bill, but tax any house size above that amount? In general, might we exempt from taxation the consumption that meets people's needs and tax only the consumption that meets people's desires?
ReplyDeleteA consumption tax, even if it had no exemption at all, would be far more fair. Do you think the bread you buy today doesn't have a tax on it? The Agricultaural company selling the seed pays taxes, the farmer pays taxes, every business the farmer utilizes to grow the crop is taxed, Wonder bread is taxed, and Jack&Jill's Grocery store pays taxes! I think John Doe would appreciate paying an extra dime for a loaf of bread that cost 40 cents less once the government's greasy hands were peeled away from the process. In reality I think there would be an exemption though - probably an amount set by the average cost of living in the state of residence rather than by exzempting types of products (otherwise we would end up with unending lobying for more and more things to be added to that list)
ReplyDeleteHi again, Phaedrus!
ReplyDeleteIt sounds like we share the goal of finding the fairest and most efficient way of imposing the taxes we need for necessary services while keeping expenses as low as possible for citizens. If a consumption tax could replace every other tax and through its simplification of the tax code introduce efficiencies that would save money in gov't budgets, and if it did not shift more of the tax burden to people who are already struggling to keep up wth increasing tax assessment (small farmers, retirees, this public school teacher, etc.), then I could get on board. And I'm definitely for a tax system that reduces the power of high-paid industry lobbyists who warp the tax code to serve their interests and not society's.
Looking at South Dakota's specific tax system, I'm still inclined toward replacing sales and property tax with a state income tax as a step toward greater tax fairness. (The Bible considers income as a perfectly moral basis for tithing to support the functions of the church -- what's different about an income tax to support the functions of the state?) However, my neighbor State Rep. Gerry Lange, a longtime supporter of a state income tax, has mentioned paging through a book on the consumption tax and finding some good aspects. Again, I'm open to alternatives.
I'll stop replying on the ancient posts now, but I had to respond to the biblical reference. The Bible also justified as moral the willingness to commit the human sacrifice of Isaac by his own father. Not to mention the invasion and anihilation of all of the gentiles in Canaan. God actually punished Israel several times for failing to follow through properly. As much as I respect religion I have never thought anything was moral just beause the big book said so :)
ReplyDelete