Call it latte, but a tax is a tax and it adds up

Posted on May 01, 2008 | Type: Press Release
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When engineers need to know the precise strength of a structure, they test it by adding tiny amounts of weight to an actual example or a model. Eventually, the structure fails. That last gram of weight the one that makes the difference between an intact structure and a pile of rubble is pretty significant, at least to the structure.

Thus, its always with some amusement when I read of how "little" government programs and taxes cost us.

Gov. Janet Napolitano has said that the County Equalization Tax was worth only "two lattes a month" to the owner of a $250,000 house. The County Equalization Tax is the 43-cent state property tax imposed on all property owners to equalize funding across school districts.

In 2006, when the state was swimming in surplus funds, the tax was suspended for three years. The money from the tax was one of the finance streams that flowed to schools. Since then, the state has used general tax funds to make up the difference to schools.

Last Tuesday (April 8), the Senate barely passed a bill that would permanently repeal the tax. Unfortunately, a gubernatorial veto is very likely.

Analysts for the legislature estimate the tax is worth about $250 million and that when it goes back into effect in 2009, the rate will be about 39 cents for $100 of assessed value. For a $250,000 house, that's about $100 per year. For a $1 million commercial property, which is taxed at twice the rate of residential property, its $800 per year.

As with that last gram of weight that causes a structure to fail, this "little" tax could make the difference between ultimate success and failure for a small business. A latte here and a latte there pretty soon youre talking about real money. Jobs, too.

Rather than trivializing a tax, our public servants would do better to recognize that if state spending hadn't grown so fast if it had only kept up with population growth and inflation since 2002 we would have a surplus of $500 million today instead of a massive deficit.

That's a lot of lattes.

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