Asking A Few Taxing Questions

Jerry Coffee
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Wednesday - June 21, 2006
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So what is it I don’t understand? The State’s been collecting General Excise Tax from individuals and businesses forever; the system is in place, right? Everyone knows how to file and pay their GET by now, so what’s the big deal in changing the forms effective January 1, 2007 to calculate 4.5 percent tax instead of 4 percent.

For anyone using accounting software, the program may have to be modified to reflect the increase; still no really big deal. GET receipts go to the same State fund as always, and beginning in January, 12.5 percent of that fund will belong to the city, to be skimmed off on an agreed-upon schedule to pay for mass transit. So why are the mayor and the governor at each other’s throats over who should collect the tax?

Clearly, it should be the state’s responsibility since it is already set up to do it anyway.


But then, what in the world did the Legislature have in mind when they wanted to skim off 10 percent of the estimated $150 million annual GET receipts to pay for collecting them; 15 mil for doing what they already do? Habit? Greed?

Now the figure appears to be $5 million for the state to hire a “vendor” to collect the extra .5 percent! Is there a rocket scientist out there who wants to make a quick five million by showing the state how to do what it already does?

This may have never even become an issue if the governor had simply vetoed the GET increase in the first place, thereby honoring her “no tax increase” pledge.

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And speaking of lawmakers trying to slip one by us: Reducing the individual property tax rate while increasing the property tax rate on businesses! I guess the city council simply figures there are more individual voters out there than there are business-owner voters.

They must also figure we are all in a coma!.

Whatever an individual is able to save through the property tax rate cuts, will be more than offset by the higher prices businesses will charge for goods and services to help cover their higher business property taxes. But, because of competitive pressure, it may be difficult to raise prices to cover the entire increase in property taxes, so there’s likely to be less money available for businesses to reinvest, thereby creating new jobs. There will be less money to raise wages for existing employees. There will be less money to support charitable and environmental causes.


Here’s a thought; how about lowering both the personal property tax rate and the business property tax rate, thereby stimulating both business activity and consumption, and watch the increased tax receipts roll in.

 

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