Sunday, October 29, 2006

Local Income Tax

Imagine my surprise when I went hunting for information about the Rockford School District election and found my idea for a local option income tax appear:

(State Reps. Dave) Winters and (Ron) Wait referenced a local option income tax, which would let voters decide through a referendum to impose a local income tax to alleviate property taxes.
Back in the mid-1970’s Jim Edgar, as a state representative, introduced the local income tax idea.It would give half the new money raised to schools and half to property tax relief.

The idea delivered a mixed message, just as today’s Senate Bill 750 does.

It co-mingles the ideas of giving more money to schools with giving some real estate property tax relief.

I cogitated on Edgar’s idea for a while and finally worked out an idea that met the widely expressed desired to switch income taxes for property taxes.

It would consist of a local option income tax. It could be done school district by school district. Later, I conceived of a county-by-county version.

The way I remember it, a petition would be passed establishing an income tax rate. It would have to be approved by local referendum.

Because people were the ones complaining about property taxes, my bill would have limited the real estate tax relief to residential property.

Statewide, almost half of property taxes are paid by businesses. If you even wonder why businessmen can support a statewide income for property tax swap, keep in mind that business pays maybe 12% of the income tax collected (down from well over 20% during the early 1970’s).

So, a tax swap is a big tax cut for business as a whole.

Whatever money was raised through the local income tax in year one would be subtracted from the real estate taxes on residential property in year two.

Of course, there would be double taxation in the first year. But, I couldn’t figure out how to cut real estate taxes without having money in the bank to replace the taxes being abated.

The referendum debate would be vibrant. I know two local school administrators who live in modest homes. Their tax burden would increase. With no new money for schools, which way would they vote?

One could predict that senior citizens would vote for it, but how would working couples vote?

My guess is that they would do a comparison of both tax schemes and vote accordingly.

And, there would be educators who figured out that the income tax brings in different amounts of cash each year. It depends on the economy. Would they want to chance property taxes fluctuating significantly?

Any referendum increases in tax rates or for bonds would still be based on the old laws.

All of the money would stay local. For most of suburbia, the so-call tax swap being pushed by the Rev. and State Senator James Meeks would take money out of suburbia.

I can’t figure out a way to force landlords to push the savings through to renters. The best answer I have is to trust market forces. Certainly, when real estate taxes go up, rents increase.

Would the reverse happen? Can’t tell you, but theory says competition should play a significant role.

The Hononegah High School event was sponsored by "Fairer Funding for Illinois Schools," a group I have not heard of before.

Always more at McHenry County Blog. Sometime Sunday, a story on Patrick Fitzgerald's sense of humor.

12 comments:

Extreme Wisdom 12:17 AM  

Cal,

They don't need anymore local or state dollars. They need a massive haircut.

We need to stop "funding schools" and start funding children.

A local income tax won't reduce any local property tax. It will simply be more money for the same people who screwed up America's education.

Cal Skinner 10:34 AM  

This would not give them more dollars.

It would just change the source.

Lovie's Leather 1:54 PM  

How about a state-wide moratorium on property taxes??? Also, income tax funding education would be a much more fair way of funding schools throughout the state. I like the idea, Cal. I like it a lot.

steve schnorf 7:29 PM  

Cal, don't try to argue with Extreme. He has seen the way and the light.

JB Powers 9:13 PM  

Steve,

Don't you think teachers could work past age 51 before contriving any more funding schemes?

Couldn't someone, somewhere in Illinois at least attempt a voucher scheme before we add another tax to the interminable list of taxable activites?

JBP

Extreme Wisdom 8:44 AM  

Steve,

My offer to debate you (or any one else) on education issues in any forum in any Illinois location still stands.

I support funding children over bloated education bureaucracies. You can't fund both.

I support a real (not fake) tax swap along with meaningful and necessary reductions in the absurd polticial power and expense of the current system.
___

Cal has made some appearances on my show, and I have the utmost respect for his views, even where I disagree with him.
___

Let's have that debate. The regular everyday Joe needs to see just how unsupportable and unrefromable the current system really is.
___

"Fund Children, Not systems"

steve schnorf 12:22 PM  

Powers: No

Wisdom: Don Quixote's perserverance was not necessarily something to be lauded.

JB Powers 12:46 PM  

SS,


The Quixote like perserverance seems to be on the side of maintaining an obsolete education system and rejecting inkling of reform.

JBP

Extreme Wisdom 1:35 PM  

Steve,

Many things that appear "Quixotic" aren't. Real reform usually seems impossible until it actually happens, at which point all the commentators start saying that it was "inevitable."

While a agree that not all perserverance is to be lauded, I'll take my chances perservering to get an education where the education of children is the central goal.

We've made the perks, pensions, and payroll the central goal, and we have $40+ billion shortfall and a poorly educated populace as a result.

I will also perservere in trying to get you, a legislator, or any one else who supports the status quo to debate me on the issue anywhere in Illinois.

steve schnorf 2:10 AM  

Powers,
it is inertia, allowed by citizen acceptance ot at least tolerance of the current system.

Wisdom,
most of us probably agree that the education of children should be the central goal. We just don't agree on what needs to be done to get there.

Nothing happens until it happens, and everything happening keeps happening until it stops. I don't see that observation as extreme wisdom.

As I've said to you in the past, I understand that you are going to keep pursing your ideas of a solution. What you don't seem to understand is that your agenda isn't going to be implemented in time to benefit any children currently alive. I think your pursuit of your idea of perfect may well keep you and others who share your ideas from doing the good that your energy could do in the meantime.

If I'm wrong, and your plan is implemented in this state while I'm still alive, I'll do my best to apologize for doubting you. But, as I've said before, I ain't holding my breath.

Extreme Wisdom 7:33 AM  

Steve,

Well said.

My pursuit of "perfect" (your word, not mine) doesn't prevent me from supporting other good ideas.

Increasing the tax credit, alternative certification, expanding charters (aggressively) etc. etc. etc. are all ideas I support. I support candidates who promote them.

If Cal could show me that the local income tax wouldn't yield one thin dime extra in taxation, and that it would reduce (eliminate would be better) the education portion of the property tax in that jurisdiction, I'd consider it.

I'm far less 'closed-minded' than you believe. Frankly, those who believe we need to give more funds to the existing failing system becasue of "political realities" (or any other reason) are far more closed-minded than I am.

I'm not holding my breath either. I'm training for a marathon.

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