|To the Editor: Proposed BG income tax hike called unfair|
|Written by David McClough|
|Wednesday, 15 July 2009 08:19|
I am disappointed that city council voted to increase the income tax. This solution perpetuates an inequitable and unsustainable policy that must eventually be addressed.
When developing a tax there are two principles to consider. The ability-to-pay principle motivates the federal income tax, which imposes higher marginal tax rates as income rises. The National Taxpayers Union reports that 50% of households do not pay federal tax, while the top 1% pays 40% of federal tax. Alternatively, the benefits-received principle requires payment for services we use. The proposed tax increase reflects the ability-to-pay principle, which seems fair given that higher income households pay more.
To appreciate the benefits-received principle, consider the Pennsylvania Turnpike. The road is financed using tolls from those who use (benefit from) the road. In Bowling Green, residents benefit from police and fire protection and trash collection. Because we benefit, we expect to pay something for these services. The university places greater demands on public safety and with less than 50% of students living on campus; the public works department presumably collects the garbage of the other half. These and others costs are paid using tax dollars.
Review of the police blotter printed by this paper reveals the burden of the student population on public safety. In fact, the Ohio Board of Regents paid $26,072 to the city for police and fire protection, a tidy sum until compared to the $83 million dollars paid to the university in 2008. This public safety subsidy is less than $2 per student. I suspect that $26,072 fails to cover the added burden.
Council must identify a mechanism through which the added burden of serving the student population is paid by the students and not just residents and workers. The most efficient option is to secure payment from the university. With enrollment of 15,000 students, the $1 million shortfall is less than $70 per student, which is less than ½ of 1% of the fees to enroll.
The city can modify the tax rate applied to rental income but this will harm landlords and non-students. We can make a moral argument that parents have entrusted their children to us and we wish to contribute to their development by establishing financial disincentives (taxes) to engage in self-destructive behavior such as tanning, alcohol consumption, smoking, etc.
In the months ahead of the election, this community must engage in a conversation that acknowledges that the current financial challenge will not allay with the end of the economic downturn but rather reflects a new economic reality facing this community. The city has a long tradition of engaging challenges. Historically, the community identified solutions enhancing the city. Let's aspire to this stewardship and rise to the occasion by developing a system of revenue generation that is equitable and sustainable.
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