Here’s the hard truth about taxes: You’re gonna pay them no matter what.
It doesn’t matter if you’re rich or poor. It doesn’t matter if you’re a person or a corporation. It doesn’t matter if the state decides to emphasize taxing income, sales, property, liquor, tobacco, inheritances, excises (whatever they are) or the air that you breathe.
Someway, somehow, directly or indirectly, you’re gonna pay up.
Now that we have that out of the way, we can have a nice, calm discussion about the best way for the government to extract money from you. By “best way,” I don’t mean the method that’s least painful (there is no such method), but the one that gives the state the best chance of establishing a reliable source of revenue, one that isn’t unduly disrupted by recessions or crazed presidential tweets. And it would be reasonable if the tax system weren’t so onerous as to inhibit economic growth and individual initiative (although it almost certainly will).
Having established these ground rules, we can safely conclude that all tax systems are horrible. Shift the burden around any way you like, but you can be sure somebody is going to get screwed. The most you can hope is it won’t be you.
You will be wrong about that.
That’s certainly the case if advocates for local-option taxes have their way.
In the 2019 session, legislators will again consider a bill allowing municipalities to impose a 1 percent sales tax on top of the current 5.5 percent state sales tax. This isn’t the first time this idea has been floated. It went nowhere in the last Legislature. And the one before that. And virtually every Legislature since shortly after the invention of hogwash.
As always, supporters of this plan are touting it as a way to reduce property taxes. Portland Mayor Ethan Strimling, whose city stands to collect an extra $16 million if the idea is approved, told the Portland Press Herald, “(The property tax) doesn’t allow us to export the burden we have to tourists, and having a municipal-option sales tax allows us to reduce the burden on the property tax when we have to raise money for schools or raise money for roads and everything we’ve got to get done.”
It’s easy to understand why Strimling feels this way. During his tenure as mayor, he’s called for increased spending on almost everything, including his salary. It has yet to occur to him that property taxes would be significantly lower if the budgets he supported weren’t so bloated.
Nevertheless, the mayor has a point. The property tax is regressive and bears little relation to ability to pay. Of course, the same could be said of the sales tax. But the property tax also supports lots of stuff that has relatively little to do with owning property, such as schools and county government.
So, let’s fix that.
If the state paid for all basic education services (with cities and towns at liberty to spend more if they wished), property-tax bills would decline by as much as 50 percent. If county government were abolished and its programs transferred to state government, you could knock another 10 to 15 percent off your tax bill. Suddenly, property taxes would not be a problem.
Of course, there’s still that little matter of finding the money to pay for registries of deeds and advanced calculus classes. But there’s a simple way to do that, and it’s one Strimling and his local-option cohorts already embrace:
Soak the tourists.
Maine’s sales tax is narrowly focused, relying primarily on vehicle sales and purchases of home construction and improvement materials. It’s way past time to apply it to all forms of frivolity. Tickets to amusement parks, ski slopes and movie theaters aren’t taxed. Neither is the cost of having somebody clean the camp those out-of-staters are renting for the weekend. In fact, virtually all services from legal fees to house painting to pet grooming aren’t subject to the sales tax.
It’s well past time they were.
This type of tax reform would be somewhat fairer than local-option taxes, which mostly benefit the largest municipalities. Sure, you’d pay more sales tax, but your property tax bill would be lower. If you rent, your landlord would have less incentive to increase what he or she charges. And tourists would finally be contributing a significant share of governmental costs.
Would somebody still get screwed? We’ve already established that they would. But it might not be you.
Although, it probably will be.
You have the option of emailing me tax-free at email@example.com.