Sunday, November 01, 2009

What Constitutes A Tax Increase?

This past week, we saw more drama in City Council, this time over whether--and when--to change property tax rates for 2010. City Council has three options: leave the millage the same, a move which would--because of increases in property values--generate about $400,000 more in 2010 than in 2009; raise the millage to the maximum allowable; or "roll back" the millage rate to generate exactly the same amount of money it did in 2009.

First, let me say at the outset: I have no position on the property tax rate. I think Council members and candidates should make their positions clear prior to Election Day. It appears some may favor leaving the millage alone, while others favor rolling it back. I've not heard anyone suggest raising it to the maximum millage permissible. Frankly, I don't care when Council takes this action, assuming members have given voters some inkling of their intentions prior to the election. (Council members are, of course, free to remain silent until after Tuesday. And voters are free to withhold their votes on that basis.)

But I'm curious about those who describe the maintenance of the current millage as a "tax increase." Is that really a fair description? If you spend more money this year than last and therefore pay more sales tax, you wouldn't complain about a sales tax increase (assuming the rate stayed at 6.5%). Similarly, if your income went up and you paid more income taxes, you wouldn't (assuming a flat tax rate) think you suffered from a "tax increase."

It seems to me Council has three options. Leave the property tax alone, increase it (perhaps dramatically), or decrease it ("roll it back"). Others seem to suggest there are just two options: roll back the millage (which they say is leaving it the same) or "increase" property taxes.

What's your take?

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