Monday, March 05, 2007

When in Rome, what?

http://www.palmbeachpost.com/politics/content/state/epaper/2007/03/04/m1a_TAX_REVOLT_0304.html

Over the past few months there has been talk of an impending tax revolt in the Orange State over rising property taxes. In the upcoming legislative session, an effort to “equalize” the tax burden is being led by House Speaker Marco Rubio who is starting to feel the heat from his retired constituents. In his plan, he’s seeking to repeal the property tax and replace it with a 2.5% increase in the state sales tax, bringing the total state sales tax rate to 8.5%. According to his logic, a consumption tax is fairer because "[it] means you decide how much taxes you're going to pay". After studying how the burdens of various taxes are distributed, this argument doesn’t seem to make much sense. After plugging a few numbers into Excel from the 2004 Tax Rates and Tax Burdens study, there’s definitely some “fuzzy” math going on behind the scenes in Florida. Just comparing the percentage of income for a hypothetical family of four, the regressivity of a sales tax is more than obvious.


Property tax % of income

Sales tax % of income

$50,000

1.76%

1.72%

$75,000

2.43%

1.72%

$100,000

2.57%

1.63%

$150,000

2.72%

1.55%






An additional problem with Rubio’s plan is that it ignores the additional burden that’s going to be placed on the lower socioeconomic households who typically don’t own a home. While it’s true that property taxes are eventually passed along to renters, the burden of the tax is already known to them on the front end when they see the rent in the lease. By trading the property tax for an increase in the sales tax, the state would be asking families in lower economic brackets to pay an unfair amount of the cost to run the government.

Civil libertarians are trumpeting this as a potential victory for individual freedom, but where is the line between personal liberty and moral obligation, and whose job is it to be looking out for those who aren’t represented by the nation’s largest political lobby group?

Here's a link to the story: http://www.palmbeachpost.com/politics/content/state/epaper/2007/03/04/m1a_TAX_REVOLT_0304.html

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