Wednesday, August 22, 2001

Moribund as it is, the tax equity issue between the cities and the county doesn't seem to have given up the ghost altogether, as The Citizen [Aug. 8] announced a second court hearing on the issue for Sept. 25. It is interesting to reflect that the leaders of Peachtree City (PTC), Fayetteville and Tyrone have hired lawyers who will be squaring off against lawyers for Fayette County: that means we have county citizens who are paying for both sets of lawyers at the behest of politicians who probably otherwise squawk about frivolous lawsuits. Somebody will probably hate lawyers because of that. Go figure.

As you know, the cities contend their citizens pay more in taxes to Fayette County than they get back in benefits, even after allowing for the fact city residents receive 77 percent of the local sales tax while they represent about 52 percent of the county population.

Let me present a few thoughts that can enlighten us about this tax equity issue.

Imagine a county that has only one city and two homes. One home is in the city, and the other is in the unincorporated part of the county. The home in the city is worth $200,000, and the one in the county is worth $100,000. If the county spends $3,000, it will issue a property tax bill for $2,000 to the owner of the city house, and for $1,000 to the owner of the county house. That's in proportion to property values. Is that inequitable?

The owner of the city house might argue that the value of the county services his family receives is only half the $3,000 the county spends, and thus claim he overpays $500 in taxes. That's basically the approach taken by PTC Mayor Bob Lenox, the leader of the pack, in his ongoing dispute with the county.

One basic flaw in this reasoning is the assumption we, as individuals or families, all ought to get back from the government the exact value of the taxes we pay to the government. A second flaw is to imagine this value can be measured with precision.

The first reason we cannot get back exactly what we pay the government is that the poor have less money than the rich. So the rich always pay more. Since being rich is way better than being poor, all other things being equal, there's only so much sympathy we can give the rich. In any event, the poor have no money, so there's no point beating a dead horse (and I don't mean to insult the poor by using that expression). As comedian Seinfeld once observed, reminding us of the obvious, dogs carry no money because they have no pockets! We don't tax dogs either.

Secondly, government can only achieve "rough justice." Rough justice is what makes all the people on your street pay basically the same premium rate for fire insurance. Some houses may be more fireproof than others, and some owners may be more careful than others, but insurance companies can't micromanage people's lives, so people are grouped into fairly uniform classes and those in the same class pay the same rates. (In life insurance, those the same age pay the same premium.)

With county government, the family with five children pays the same school tax rate as the family with two children, or even with no children at all. Those who send their children to private schools could holler the loudest, but, let's face it, using private schools is their choice.

The bottom line is that there's no such thing as real tax equity, a notion that's intuitive for most of us, even those who are not cynical.

The PTC mayor believes that, in the name of tax equity, revenue which comes out of PTC should all be returned to PTC. I don't know where he gets the idea that just because NCR, Matsushita, TDK, Hoshizaki, Photocircuits, Fasson, etc. are located in PTC their county taxes should be spent exclusively for the PTC residents. Same reasoning for the megastores of Fayette Pavilion in relation to Fayetteville.

These properties are the tax "crown jewels" of Fayette County, and the taxes they produce don't belong exclusively to the cities in which they happen to be located. (These businesses certainly couldn't locate in those parts of the county with no water and sewer service.) So when PTC claims it pays so many dollars in property taxes to the county, it should leave aside the portion that comes out of the big boxes: that money is not coming from the city "residents" and it ought to belong to the whole county.

It is unwise for our county commissioners to concede that PTC ought to receive back all the county taxes paid by PTC property owners, and then play the mayor's little accounting game even if with different figures. Cost accounting has its limitations, and even more so when applied to governmental functions. I have seen letters from former county finance director Emory McHugh which explained all of that to both the commissioners and to PTC Mayor Lenox. The mayor refused to believe it, for obvious reasons, but the Board of commissioners doesn't seem to have fully grasped what the finance director explained to them all.

Reflect again on my example of the county with two houses, one in the city and one in the county. Add an extra house in either place, or a manufacturing facility, and see how you can reason out the tax equity of the situation.

Conclusions: (1) tax revenue never returns to the exact same place it comes from; (2) tax revenue never returns in the same exact amount as was paid; and (3) attempts to allocate taxes spent for the "general welfare" are generally delusive, resulting in a waste of time and needless squabbles. In other words, the term "tax equity" is as much of an oxymoron as a giant shrimp.

Claude Y. Paquin

Fayette County

cypaquin@msn.com

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