Arguments in the Legislature and media over implementation of the referendum-passed 3 percent income tax surcharge have been dominated by the potential impact of the surcharge on people making over $200,000 a year: Will they leave, or won’t they?
So far, I haven’t heard much discussion in terms of the relative impact on these high earners of the local property tax decrease that they are likely to experience when the referendum is implemented, versus their state income tax increase.
Income taxes can be reduced by tax deductions, of which there are a wide variety (including state property taxes), and income reporting is subject to the vagaries of each taxpayer’s records and conscience. Property taxes are almost impossible to avoid or evade once incurred, and high-income earners are generally the same people who incur high property taxes on their residential and investment property.
If schools are funded at the “mandated” 55 percent level with additional income taxes, local property taxes can be reduced to reflect this fact, since school systems will require less local funding. And high-income earners will likely receive a comparable, or possibly greater reduction in their (unavoidable) local property tax bills than the increase they get in their (highly avoidable) state income tax.
So under those circumstances, why would they all move away?
Roger Carpentter
Freeport
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