Property Tax Independence Act

HB 76 AND SB 76 PROPERTY TAX INDEPENDENCE ACT

PROPOSAL EXPLAINED

 

 

 

Talk of eliminating school property taxes has been going on for some time. While it was expected to be introduced this year, it now appears it will be a major issue in the upcoming Governor race in 2018. The property tax is a discriminatory and outmoded method of raising education funding. Funding schemes need to broaden the base for taxation rather than demanding only property owners finance education. I will attempt to summarize the proposals being considered to eliminate school property taxes.

 

1. The major source of new funding would be to broaden the items covered by the sales tax and raise the sales tax from 6 to 7%. Items that would continue to be exempt would be basic food items, such as meat, dairy, and produce, utilities, heating fuels, health, hospital, and dental services, prescription drugs, home health care, tuition, day care, charitable organizations, and business to business or wholesale transactions. All other items and services would be taxable.

 

2. Raise the state income tax from 3.07% to 4.95%. While many say this will raise the taxes on high income people beyond their property taxes, that is unlikely. If someone is earning $200,000 a year in joint income, their state tax would go from $6140 to $9900. This would be an increase of $3760. I would expect such earners are paying more than that in school taxes. The idea is to spread the tax across all residents. All residents would be taxed based on their ability to pay.

 

3. Property taxes would continue for school districts who have incurred debt. This would continue until the debt is retired. This cost would then be an average of 10%  with a high of 18% of present property taxes. I would suggest a flat $500. per year adult per capita tax to retire the debt as this would broaden the base of taxpayers and pay off the debt in a shorter time.

 

4. New construction would need to be put to a local referendum with the costs revealed.

 

5. All schools would be funded by the state at the current level. The increases in school budgets would be tied to the average weekly wage increases in the state. In the last 20 years, school property taxes have increased 146%, the average weekly wage has increased 80% and the Consumer price index has increased by 59%. There needs to more restraint on taxes rather than the whims of Superintendents and School board members.

 

6. A constitutional amendment would be enacted to eliminate all property taxes.

 

The positive results of tax reform would be more disposable income for most residents, an increase in property values, an increase in economic activity, making the state more economically competitive compared to many other states. The state is in need of reform, as it is losing population and falling behind in economic opportunity. Responsible leadership requires that changes be made before a crisis level is reached and recovery made much more difficult.