One good way to decide on SPLOST

Claude Paquin's picture

Here’s what I believe might be a smart way to decide whether to vote for or against increasing the sales tax to 7 percent to help out the Fayette County School System.

The first question to ask is, will paying this tax be a hardship for me or my family? Since the tax applies only to goods, and not services, you might want to view it as a reduction in income of one-half of 1 percent. It would be unwise for you to vote yourself into bankruptcy. If the tax would be a hardship for you, vote No. Otherwise, read on.

The second question to ask yourself is whether you have relatives, friends or neighbors for whom the tax would be a hardship. If boxing champion Evander Holyfield’s mansion is advertised for foreclosure, perhaps other people too have problems. Remember that this is a tax you’d be imposing not only on yourself but also on them. Thus you should be sensitive to their needs and situation.

If, for instance, your old parents are retired and live on a fixed income that’s a bit tight — and perhaps they don’t tell you about all their problems — should you impose this tax on them? Would you be willing and able to help them out financially to make up for the tax? Do you have friends or neighbors out of work or in a job they might easily lose, or with a serious health condition, who are in fear of experiencing severe money problems?

If your voting for the tax would visit a hardship upon these people, then heeding the second greatest commandment of “Love thy neighbor,” you might show sensitivity by voting No. Otherwise, you should read on.

If, in your honest opinion, all the people you care for and respect could afford the extra 1 percent sales tax, you may conclude the tax would at least do little harm.

It would still do some harm, however, because all taxes do. They take away your property against your will, leaving you with fewer personal resources. Voting for a tax also allows elected officials to shirk their duty and encourages them to come back for more later as an easy solution to problems they often could have avoided.

The third question to consider is really whether the good outweighs the bad. Will the benefits of the tax exceed the pain it causes? That’s the decision you make every time you attempt to spend money wisely. Most people, after all, have only so much money, and they must make choices.

People can have differences of opinion on the subject, but their opinion should be based on facts rather than emotions.

Saying that visitors will come to Fayette County and pay our sales tax for us is obviously delusive. A study I made nine years ago showed that perhaps 4 percent of our sales tax was paid by visitors. Noticing that businesses already pay a good 25 percent of our school property tax, and that a school property tax decrease would transfer their share of the burden onto ordinary consumers’ shoulders would also be a wise observation.

Are there alternatives to increasing the sales tax that might be less painful? When bonds were considered as an alternative for the sales tax in financing school buildings, it was found they could cost about 20 percent of what the sales tax would cost.

The reasons were that bond interest rates are low, the tax burden is spread out over both people and businesses and over a period approaching the useful life of the buildings, and the property tax is a deductible item on income tax returns. Of course, it’s paid for a longer period but it is easier to absorb, and it is absorbed by the people who get the benefit.

Are all the expenses intended to be covered by the sales tax wise? One can observe that 1 percent of the sales tax revenue is retained by the state of Georgia for its collection services, and retailers keep one-half of 1 percent. Thus there’s shrinkage of 1.5 percent right off the top. That may seem small, but for $100 million that’s $1.5 million that’s thrown away.

Are the items to which the remaining 98.5 percent will be applied all worthwhile? Could some be financed differently?

These are fair questions to ask, because even if circumstances change after the vote, elected officials may feel obliged to proceed with their plans — such as building yet another school when the student population has stopped growing.

Observe also that those who put together a project list for a SPLOST will endeavor to include a pork barrel benefit for every school, or every area of a county, whether it is needed or not, to curry favor with every segment of the population. The non-essential parts of the project run up the cost, of course, but they are designed to attract votes.

As you ponder this third question, there’s a fourth one. Thoughtful voters are always mindful of setting bad precedents. The trend is toward ever-increasing taxes. Will a Yes vote encourage this rising tide?

In view of our common heritage, common language, common border and style of living, we might view Canadian citizens as pretty much like us, even though they never joined our Boston Tea Party. It is true that they pay no insurance premiums for health care, like we do, but except in oil-rich Alberta (north of Montana) their sales tax is 13 percent and they pay much more income tax than we do and as much property tax.

Since Canadians seem happy enough, if a little less prosperous than Americans, we can suppose we Americans could pay up to 13 percent sales tax too and live happily enough. Mind you, they pay the 13 percent on services too, so a commission of $10,000 to your real estate agent comes with a tax bill of $1,300, and a charge of $5,000 from your funeral director comes with a tax bill of $650. Lawyer, accountant, tax preparer, vet — they all come with a tax. Even a postage stamp at the post office comes with a tax.

If the sales tax increase from SPLOST is approved, whether you helped vote it in or not, it won’t be a disaster. You might want to consider yourself a little more “Canadian” — I wouldn’t dare use the word socialist — if it happens, but the sun should still rise in the east and set in the west, and life will go on.

You may wonder whether the benefits are really worth the tax, but there’ll be some benefits for some people.

Long-term, let’s consider this. Not counting the building of new schools, Fayette County spends $200 million a year on its public schools and receives $100 million from the state. Since each 1 percent of sales tax brings in $20 million, we might consider a 5 percent sales tax just for schools, with an extra 1 percent for school construction.

With that 6 percent extra sales tax, we’d pay 12 percent in total sales tax while eliminating all school property taxes. We can’t do it now because visitors would avoid us and our own residents would try to make purchases out of the county, but if each county can ratchet itself up gradually along with its neighbors, that objective could be reached in our lifetime.

In the end, you don’t take your money with you. But until the end arrives, there’s need to manage it thoughtfully. That’s what votes like this are all about.

Do you remember my first article about the history of the sales tax in Fayette County, published on Aug. 13? It might fitting that my last words refer to that history, as the voters of Fayette County are about to make history right now.

In that article, I stated that budget difficulties not unlike those we see today motivated the legislature to raise the statewide sales tax to 4 percent on April 1, 1989. Four percent is what the statewide sales tax rate has been ever since.

As the state budget difficulties multiply, it should come as no surprise to anyone who is wide awake that our Georgia legislature may soon entertain the idea of raising the state sales tax again. The out-of-county education experts invited to speak at an Oct. 2 pro-SPLOST meeting sponsored by the Chamber of Commerce all bemoaned the statewide cuts in education budgets. They were focusing on the whole state, as they know nothing of our situation in Fayette County.

What happened in 1989 may happen again in 2009. The next election won’t take place until late 2010, and the governor is not up for reelection. It’d be a perfect time.

Just as our own school board avoided bringing up SPLOST before the July primary election, our Georgia legislators will not bring up raising the state sales tax until after the Nov. 4 election. Then watch out!

Should Fayette voters agree to raise their sales tax now, they will signal that voters are ready for more tax, but more importantly, they could make the Fayette sales tax go up two percentage points, from 6 percent to 8 percent, next April 1. Then our school board could be swimming in money.

Think of how clever it would then be to put it in a swimming pool.

The school system experienced SPLOST defeats in 1998 and 1999, and it did not collapse. The current SPLOST campaign brought to light incompetence, mismanagement and deceit in our school system, and withholding money at this time is more likely to encourage better management than lavishing plenty more.

In an era where people demand open and competent government, our school board has concealed much of what it does — witness its ways of handling Open Records Act requests, and it has never been willing to be educated about alternatives to its present ways, pretending it, and only it, had all the answers.

It may take this vote to change that attitude, and to open the school leaders’ minds to better ideas for the school system financial management. It will benefit our children more to send the proper message to the school board than to give in to deception and threats.

[Claude Y. Paquin, a Fayette County resident, is a retired lawyer and actuary.]

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alittlebirdietoldme's picture
Submitted by alittlebirdietoldme on Sun, 10/26/2008 - 5:42pm.

driving today i noticed several e-splost signs on school property.
Whoever did this is desperate. School principals should be accountable for this, and I believe they should be removed.

suggarfoot's picture
Submitted by suggarfoot on Sun, 10/26/2008 - 6:49pm.

for the most of us, we don't think it ethical.

Submitted by bowser on Thu, 10/23/2008 - 1:39pm.

So now we've had about 3 trillion words worth of kitchen table noodlings on computer maintenance, the joys of bond debt (at least the kind he doesn't pay) and stats from 9-year-old Paquin Institute "studies" on non-resident buying patterns.

And here, finally, our learned lecturer reveals (perhaps unwittingly) the core of his philosophy in two sentences.

Even if you decide a 1 cent sales tax increase for schools wouldn't wreck your household budget, Mr. Paquin says:

"It would still do some harm, however, because all taxes do. They take away your property against your will, leaving you with fewer personal resources."

Personally, I view schools, along with roads, stoplights, libraries, police and fire protection and, yes, even some social agencies, as ADDING to my "personal resources" as a citizen of my community.

That's why I pay taxes willingly, if not cheerfully.

It's also why I will evaluate proposals for tax increases on current conditions and needs and alternatives, not on how they square with some warped ideology that sees all taxes as being collected "against your will" and doing harm.

Mr. Paquin has said he speaks for Fayette taxpayers, though I can't find any record of him ever being elected to such an exalted post. Heaven help us if he really speaks for many people other than himself.

suggarfoot's picture
Submitted by suggarfoot on Thu, 10/23/2008 - 1:56pm.

Are you are loosing your temper? along with your votes?. You can hog the formum with your SPLOST, you can brow beat parents at orientations with SPPST and you don't want MR P to have a say? This is so reminess of the BOE meetings with others want to say something.

The Crime Dog's picture
Submitted by The Crime Dog on Wed, 10/22/2008 - 7:55am.

Claude says: "Think how easy it would be to put in a pool."

Really now, CP. The pool is OFF the table for the SPLOST. Good God man, you're almost as good at this fearmongering as Steve Brown is. (that's a backhanded compliment by the way).

You need to lay off the Starbucks. Seriously, you could fund your SPLOST contribution by laying off the expensive coffee twice a week.

But that would inconvenience you on behalf of our county's future. So nevermind I guess.

Submitted by Claude Y Paquin on Tue, 10/21/2008 - 3:55pm.

The series of articles I wrote for The Citizen began with a history of the sales tax in Fayette County, published on August 13. Today’s article is the 11th in that series, and the final one.

Taxation is a boring subject, until your own pockets are being picked.

Even then, many people will not have read these articles. I have tried to keep the articles short and focused on one aspect at a time, to make them more reader-friendly. Then the idea occurred to me I could supplement them with electronic footnotes for the benefit of people who really care to know the truth and like being able to check things out.

There are good things to be said about taxes. They really bring in the moola.

Unfortunately, they also encourage extravagance and waste. Sales taxes in particular are great, as they are essentially the only taxes that could exceed 100 percent and still be collectable. You couldn’t do that with the income tax, at least not for long.

Recently, a committee appointed by state school superintendent Kathy Cox recommended reforms in the way school boards are run, with members elected on a nonpartisan ballot and who serve without compensation.

If we truly had a crisis on our hands in Fayette County, the school board members would make the symbolic gesture of volunteering right away to work without compensation, and the school superintendent would also take a pay cut (of about $55,000) to make his salary no more than the governor’s. They would do it “for the sake of the children.”

It was heartening to read in the Oct. 21 AJC (page A10) a letter to the editor reporting that the school superintendent for the city of Decatur had turned down a $14,640 earned bonus because of the worsening economy and state cuts. If something like this has happened in Fayette County, we haven’t been told yet.

Had there been a real crisis in the Fayette County school system, the taxpayers would have been alerted much sooner, there would have been public debate before the July primary election, and the extra tax could have been for one year, and not five years. Then it could have come up for another one-year renewal if the crisis had not passed.

In fact, it is possible to have a SPLOST that runs for only three months, or six months. Five years is what you pick when you intend the tax to be permanent.

As I have explained in past articles, the school bond millage tax rate is artificially high in 2008 and 2009 because the school board wanted it that way. The school board manufactured its own crisis. In the fall of 2010, the school bond millage will start making sense.

It must also be said that the financial management of the school system has been far from astute. A review of the courses in the UGA College of Education graduate degree programs shows not a single course on school system management, which may explain why the presence of two persons with Doctor of Education degrees at the top of our local school system is of no benefit in that crucial area.

Every person’s perspective on SPLOST is different. At the very least, it’s good for people to have proper information before they make a decision. They are entitled to the truth, the whole truth, and nothing but the truth.

While I have not dwelled on the poor decision-making involved with locating and building schools not yet needed, a subject ably covered by others, I have endeavored to give Citizen readers the whole truth, because the school board would not do it and has even concealed some of it. The ultimate decision is up to the voters.

suggarfoot's picture
Submitted by suggarfoot on Wed, 10/22/2008 - 6:16am.

lucky to have people like you, Steve Brown, and Nicole File.

People who will take their time to stand up and tell the truth even though some in the gutter would love to pull you down with them.

suggarfoot's picture
Submitted by suggarfoot on Wed, 10/22/2008 - 6:16am.

lucky to have people like you, Steve Brown, and Nicole File.

People who will take their time to stand up and tell the truth even though some in the gutter would love to pull you down with them.

Submitted by boo boo on Tue, 10/21/2008 - 11:45pm.

Thank you Mr. Paquin for your time and very informative information on Splost's and other taxes. All those that have read your articles are now well informed to make their decisions at the voting both. This voter has already voted NO on the Splost in question. I hope everyone in the future will at least give it some thought before voting for one. We are lucky to have one informed Actuary/Lawyer/Tax Specialist living in our County who wanted all of us Taxpayers to be informed on Taxes and Splosts.

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