Keeping your eye on the pea
Tuesday, May 13th, 2008 By Mike MaurerMarc Kilmer keeps his eye on the pea with this Buckeye Institute Viewpoint , disparaging the earned-income-only income tax for school districts. The very thing that was sought to be achieved, exempting retired people from paying for school districts, is the thing that Kilmer attacks:
Politicians need to be honest and levy taxes so that voters can truly appreciate the cost of the taxes against the benefits received by new spending. If a new school is truly needed, taxpayers should be willing to bear the cost. If it is not, however, then politicians should not be trying to trick voters into approving it by shifting the cost to only a small segment of school district taxpayers.
The difference between taxes and user fees is one of the key components of transparency, the character of knowing what your government is doing. When government officials are able to shift dollars from one character of government activity to another without structure, rhyme or reason, voters cannot follow what their government is doing.
May 14th, 2008 at 12:55 pm
Any tax policy has winners and losers. A property tax exempts renters who may have kids in the district and hits business who, in theory, does not benefit from the school district at all. An income tax excludes business who could (in theory) benefit greatly from the school district. An earned income tax excludes retirees and business. A user fee would be the fairest but goes against the concept of a “free” public education.
The real issue is not how the money is raised, it is how (and how much) money is spent. The rate of increase of public school expenditures in the state is much higher than the rate of increase (decrease?) of incomes in the state, so no matter how those incomes manifest themselves tax wise, if you ignore expenditures, the state is in an unsustainable situation vis-a-vis school funding. It is not a question of who deserves what, it is simply a matter of affordability over time.
May 14th, 2008 at 1:46 pm
You are right that it’s very important to keep an eye on the rate of increase in government spending. But the way taxes are levied is important, too. As you point out, there will always be winners and losers in any tax policy. The important thing is that if taxes are being raised to pay for goods and services used by all, then the tax should be as broad-based as possible. This will both ensure that those who benefit pay but also that the rate is low. The earned income tax tries to single out only a small portion of taxpayers to shoulder the burden of public schools.
Of course, as I mentioned in my article, not all benefit from public schools. Those with children benefit the most. In cases where only a certain segment of society imposes costs on the government, it is only fair that they pay more to compensate for those costs. But I doubt the idea of singling out parents to pay a higher school tax would be too popular as you say. So it’s a difficult question.