The Brain-Dead "Increased Tax Base" Mantra
It is a source of continuing frustration to me — hair-tearing-out frustration — that it has been HALF A CENTURY since the State of Wisconsin adopted its system of shared revenue for municipalities and general equalization aid for school districts, and their effects are STILL being ignored by supposedly "expert" analyses like the one from Paul Fanlund in Thursday's Cap Times.
Fanlund not only beats the "benefits of TIF" drum himself with his mention of "city experts" having identified "73 projects that provided $106.7 million in subsidies that resulted in $1.6 billion in added tax base", he cites unnamed proponents of Judge Doyle Square lamenting that "taxpayers might lose out in perpetuity on the bigger tax base", unnamed "others" who "think TIF is vital because we desperately need an increased tax base for schools and city and county governments", and Mayor Paul Soglin as saying "I want something that’s going to pay off for the public. That means a long-term benefit to the school district and the county as well as the city. It means developing the tax base.”
Yes, yes, we get it. Building more taxable property does in fact increase the tax base, practically by definition. And the owners of that property will in fact be paying property taxes on it. The unstated corollary is that "Well, if they're going to be paying more, then you and I must necessarily be paying less!" But that's true only if, by "you and I", you mean "the State of Wisconsin". Because every increase in locally collected property taxes is matched by a decrease in state aid. It's not quite dollar for dollar, but almost. So we could build a 12-story hotel every 10 blocks for the entire length of Washington Avenue, East and West, and you might see the property taxes on your home drop by 5 or 10 bucks a year. Or you might not.
State law figures, quite rightly, that if Madison is doing really well in terms of its own local tax base, state money is needed more elsewhere, and so the aid formulas reallocate it to poorer communities and school systems. The net result is the admirable principle that cities and schools that spend at the same level (per capita or per pupil) will tax at the same rate everywhere in the state, regardless of tax base!
And, as I said, this has been true for over half a century. Why do these guys continue to ignore it?
= = = = = =
The fundamental rule of analysis: Always ask "Compared to what?".
Fanlund not only beats the "benefits of TIF" drum himself with his mention of "city experts" having identified "73 projects that provided $106.7 million in subsidies that resulted in $1.6 billion in added tax base", he cites unnamed proponents of Judge Doyle Square lamenting that "taxpayers might lose out in perpetuity on the bigger tax base", unnamed "others" who "think TIF is vital because we desperately need an increased tax base for schools and city and county governments", and Mayor Paul Soglin as saying "I want something that’s going to pay off for the public. That means a long-term benefit to the school district and the county as well as the city. It means developing the tax base.”
Yes, yes, we get it. Building more taxable property does in fact increase the tax base, practically by definition. And the owners of that property will in fact be paying property taxes on it. The unstated corollary is that "Well, if they're going to be paying more, then you and I must necessarily be paying less!" But that's true only if, by "you and I", you mean "the State of Wisconsin". Because every increase in locally collected property taxes is matched by a decrease in state aid. It's not quite dollar for dollar, but almost. So we could build a 12-story hotel every 10 blocks for the entire length of Washington Avenue, East and West, and you might see the property taxes on your home drop by 5 or 10 bucks a year. Or you might not.
State law figures, quite rightly, that if Madison is doing really well in terms of its own local tax base, state money is needed more elsewhere, and so the aid formulas reallocate it to poorer communities and school systems. The net result is the admirable principle that cities and schools that spend at the same level (per capita or per pupil) will tax at the same rate everywhere in the state, regardless of tax base!
And, as I said, this has been true for over half a century. Why do these guys continue to ignore it?
= = = = = =
The fundamental rule of analysis: Always ask "Compared to what?".
posted by Richard S. Russell | 9:32 PM
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