Editorial in the Daily Herald on Property Tax Increase

http://heraldextra.com/news/opinion/editorial/article_77bb338c-f144-5955-bc27-7da5900a4cbe.html


In Our View

Utah County tax semantics

Posted: Thursday, June 10, 2010 12:05 am

A tax hike is a tax hike is a tax hike. Or is it?

County Commissioner Gary Anderson and challenger Joel Wright have been scrapping over whether Utah County taxes have or haven't gone up. You'd think the answer would be obvious, but in the weird, wonderful world of property taxes it all depends on what you mean.

Wright says homeowners are paying a higher rate -- 8.5 percent.

Anderson replies that county homeowners overall are not actually paying a higher amount.

The value of most homes across Utah Valley has been dropping. When that happens, Utah law allows the county to raise the rate so that it takes in the same amount of revenue. So, legally, there's no tax hike.

It's true that most people aren't writing a bigger check to the county for their taxes, because the decline in home value offsets the rate hike. The bottom line is the bottom line, or so that argument could go. If you aren't paying more, you aren't paying more, and that's that.

It's a valid argument, but will it resonate with voters?

Well, that depends. For example, imagine that you go to a department store, and plan to buy $100 worth of clothing. Let's say the sales tax is 6 percent, so you expect to pay $6 in sales taxes. At the register, however, the clerk says there's a big sale, so the clothes only cost $50. Great! you think; and I'll only owe $3 in sales tax. That's a win-win.

But suppose the clerk still charges you $6 in sales tax. You'd be furious because that would bump the rate to 12 percent. It wouldn't help your mood if the clerk said, "Why are you complaining? You're still paying the same amount overall for your purchase, including the tax. And the government really needs the money."

Or imagine that your income dipped but the federal government increased the tax rate so that you paid the same amount as you did at your old salary. You'd howl. It would be little consolation that your check to the IRS was for the same amount as the year before.

Utah County taxpayers might feel the same way. At least on paper, they've lost wealth if the value of their houses declined. So it may grate to pay a higher tax rate.

Of course, what's even more irksome is that the last decade has exposed property tax assessments as fiction. Many houses in Utah Valley saw their theoretical value soar after about 2001, only to plunge when the recession struck. The only known, concrete value of a house is whatever a buyer pays for it; the rest is guesswork. Having to pay taxes on those guesses looks less and less fair every year.

The more important issue is whether the county spends those taxes wisely. With the rate-amount issue clearer, it might be time for Anderson and Wright to further explain why they're the ones to keep county spending in line in the future.

When incomes fall or when real estate values decline, government spending should follow in the same direction. It's time to spend less -- a lot less. Where did the idea come from that government should largely be immune from the economic pain that is felt by the people in a downturn?