Thursday, May 21, 2009

Sales tax versus property tax

TARTA is pushing for an additional amount to be added to our sales tax (.5%) as a method of funding to replace their property tax levy.

From a personal perspective, I understand the reasoning that many property owners will have on this: I'll save money because a sales tax will cost me less than the levy.

This is certainly true for me - I'd have to purchase over $41,000 of taxable items to equal the more than $200 per year I currently pay for the TARTA levy on my property tax bill. (Of course, a couple of major purchases like a car, major appliances, or home improvements could put me over that level.)

However, with the sales tax I'd lose the ability to periodically express my approval/disapproval of the service provided by voting for/against the levy.

And while I might save money going to a sales tax, others in my neighborhood who have smaller lots and homes wouldn't. In fact, I checked the amount the local ice cream store pays for the levy and they'd only have to have about $6,500 in taxable purchases to exceed what they're currently paying. When you're purchasing napkins, spoons, paper products, cleaning supplies, and other non-resale items, getting to that level isn't hard.

Renters will probably not see a reduction in their monthly payments if the landlord has a reduction in the property tax - but they will pay more for their purchases.

There are many other aspects of this issue, some generic in terms of which system of taxation is actually better (or has the least impact financially) and others are specific to TARTA.

I'll be talking about this on Eye On Toledo tonight and adding more blog posts as I refine my own position.

3 comments:

Hooda Thunkit said...

Maggie,

You sum up the situation very well. although something is still nagging me.

IF (and that's a very big "if"), TARTA does go for a sales tax, can't it be a tax that has to be renewed by the voter vs. a permanent increase?

I'd really like to vote for or against all taxes periodically, wouldn't everyone?

Maggie Thurber said...

Hooda - I don't believe that such sales taxes are subject to periodic voter approval. That's my biggest concern (after paying any sort of tax for this type of service in the first place).

Tim Higgins said...

Maggie,

I love the way that you work the numbers to show us what it all means. I wish however, that those pushing this proposal would likewise explain to us why they would prefer not to justify their service to the community or even their very existence should not be questioned by those picking up the tab from time to time.

We are told that by people like Ben Konop that going to a sales tax spreads the load and puts upon consumption. Consumption of what? If this were truly to be based on consumption, TARTA fares would be forced to cover its costs.

Instead we are told that we all must suffer the burden for a system that few use. Instead of seeking to be more cost effective, TARTA simply seeks a broader tax base.

This may be the lesser of two evils, but the less of two evils is still evil.

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