Mackin: Sales Tax vs Property Tax
As we look to the future in a community that has for most of its history relied on timber receipts and federal payments in lieu of timber receipts to fund basic services, we must make a major decision on how to replace $12,500,000 in our general fund. This figure amounts to about 67% of the total needed for basic services. This figure basically represents the entire budget of the Sheriff, the jail, the District Attorney’s office, and the juvenile detention facility. The only tax revenue that can generate that amount of money would be a sales tax or property tax. In 99% of the cities and counties across the country, the property tax is the system used. Sales taxes are sometimes added to state taxes in some of the larger jurisdictions where costs are ridiculously high. Services in Josephine county can be described as “lean” at best. Any further reductions in what is currently offered would be unwise and downright dangerous. Lets look closer at the options:
SALES TAX
ADVANTAGES
• Everybody pays including visitors.
• Payments, except for large items, are barely noticeable.
• It is controlled by the payer.
• All taxes must be voted on by the citizens.
DISADVANTAGES
• To obtain the needed income, and at the same time to exclude groceries and prescriptions, the rate would need to be 4%.
• Merchants would have to be paid a percentage to collect the tax.
• A new dept. at the county would have to be set up to handle the administration, collection, and enforcement of the tax.
• Big ticket customers would shop elsewhere, causing our local businesses to suffer economic losses. These are the same businesses that support our schools and local non-profit organizations very generously.
• Sales tax is not a deductible item on either the federal or state tax return.
• The amount paid by non-residents would approximate the amount of the overhead; thus, local citizens would be actually paying 100% of the amount needed by the county.
PROPERTY TAX
ADVANTAGES
• Everybody pays—businesses, homeowners, rental property owners, renters through their landlords, and out-of-state property owners.
• 100% of every dollar collected goes directly toward local services.
• There are no additional costs or overhead to manage the system.
• The rate is the same for everyone, but higher value property owners pay more.
• Senior citizens with household income under $37,000 may defer their taxes. (There have been no foreclosures of property due to non-payment of taxes in the last 5 years.)
• Property taxes are fully deductible for those that itemize on both federal and state income taxes.
• Property taxes are limited by the State provisions of Measures 5 and 50.
• Property taxes may be paid in three payments or monthly if paid through a mortgagee.
• All property taxes must be voted on by the citizens.
DISADVANTAGES
• When added to other property taxes such as schools, cities, and special districts, bill appears to be large, and homeowners feel like they carry most of the burden.
