First, let’s agree on one thing. Even though Republicans are supposed to be the most moderate when it comes to taxes, our Republican candidates are often not all that Republican in their ideas.
Just as it was politically suicidal for most Georgia candidates not to be Democrat until the tide started changing in the 1970s, one’s chances of being elected as a Democrat aren’t too hot in many areas of Georgia right now. So those who REALLY want to get elected quite often do it by casting their lot with the Republicans. It’s convenience, not principle.
With that in mind, there are two realities we need to face.
Reality number one is that by and large our elected officials like SPLOST, the special-purpose local option sales tax. To them, it’s an all-purpose tax that’s added to all the others they collect.
Not only is it convenient, but they can blame the people for it, because in the end the people themselves have voted for it. To our elected officials it appears politically safe.
Reality number two is that SPLOST taxes are ratcheting up and up, and become permanent. Virtually everyone wants to leave a better world for “our children.” To leave them higher tax rates is not necessarily leaving them a better world, but nobody seems to think of it that way.
When it comes to the sales tax, right now Fayette County is a 6-percent county. Clayton County, next door to us, is already an 8-percent county. Coweta and Spalding are 7-percent counties. Fulton and DeKalb are 7-percent counties but the considerable portion of these two counties within the city of Atlanta (including the airport) is an 8-percent area.
It might go to 9-percent in Atlanta soon, as their politicians are considering some sort of transportation tax that would ratchet this up some more.
These sales taxes include a state tax of 4 percent, and the rest is local. Most of the time the local part, usually with a cute little acronym ending in OST (for option sales tax), is supposed to come to an end when the projects being funded are completed, but politicians have rigged the system so they never end before the maximum period they can get it going, now usually six years.
Not all the projects are bad, but the idea is to come up with projects numerous and expensive enough to get the tax going as long as possible. Then, as the tax period is coming close to ending, the idea is to come up with more projects to keep it going indefinitely.
Some people realize that this is going on, but a whole lot of people don’t. In essence the people are being manipulated, and in a world where some people fall for all kinds of tricks and scams, it’s not surprising that some people will say Yes for the projects without thinking too hard about the fact they are also saying Yes to increasing a pickpocket tax they pay daily. (We eat daily, and it’s charged on food.)
One big flaw to the whole SPLOST system comes from forcing people to vote on two things at the same time. The intelligent way of looking at this might be to ask two questions:
(1) do you approve of these projects?
And (2) do you approve of a sales tax increase as the right way to finance them?
Virtually all the projects are for capital expenditures, like major road improvements and necessary new buildings. These projects will benefit local residents for 25 years or more. The question some of us are asking ourselves is why we, who are living in the county right now, should be paying within five or six years for something that will last at least 25 years and will benefit all the newcomers between now and 2041.
Let’s put it a different way. Does it make sense for someone with limited resources to buy a house (as a home) and to try to pay for it over five or six years? Why does it make more sense to pay for major public improvements in such a short time? Couldn’t there be smarter ways to finance these projects?
Of course there are. We have financial institutions right now that don’t know what to do with all the money they hold, which they would love to lend. (Just look at all the come-ons from banks and credit unions on car and home loans.)
We have retired folks who don’t trust the gyrations of the stock market and are struggling to earn a bit of interest on their savings. They’d love to lend their money, if they could do it safely and earn a bit of interest on it. In the current economic environment, it could be a good deal for both the borrowers and the lenders.
Observe, by the way, that retired folks might lend the money indirectly, through certificates of deposit and savings accounts, with financial institutions as intermediary. Instead of increasing their tax they could increase their retirement income a little, and everyone could benefit.
Some SPLOST advocates are hung up on the idea of having people from other counties coming into Fayette County to pay our sales tax. So long as Fayette County charges less sales tax than neighboring counties, there might indeed be a few shoppers who, after voting to raise their sales tax rate at home, now come to Fayette to buy groceries. These people would lose all incentive to do that, and we’d be killing that particular goose that lays the golden eggs by raising our sales tax.
The stark reality, however, is that sales taxes are often paid on items that are delivered and don’t go through stores. Replace the roof on your house, or your heat pump, or make major alterations to a building, and the sales tax will add up fast. Even buying a refrigerator will cause a noticeable tax.
I find the argument of raising the tax “because we’ll get other people to pay our tax” demeaning and even immoral. It certainly does not appeal to anyone’s better nature. And it’s not a serious one.
As with a lot of questions in life, the idea of financing our public needs through an increasing sales tax has its pros and cons. The “con” part, however, should not turn out to be a con job.
We should not delude ourselves into thinking that SPLOST is the answer to everything. If our politicians force us to make that choice, we’ll have the chance to decide that at the ballot box, but since we’re now in the political season it would not be a bad idea to probe what our candidates think about all this.
In the end, elections are exercises in good judgment, and we reap what we sow.
[A Fayette resident, Claude Y. Paquin is a retired actuary and lawyer who has contributed many past columns on tax issues.]