Host: Stephan Currie
Guest: Jared Walczak of the National Tax Foundation
Topic: Citizens in Michigan and other states who think there’s a practical way to replace the revenue brought in by property taxes are in for a rude awakening, said the author of a new report on taxing options in a special episode of Podcast 83.
Jared Walczak authored There’s No Good Way to Pay for Property Tax Repeal, a report issued by the National Tax Foundation in early October. One of its findings is: “All revenue alternatives are less conducive to economic growth than the existing property tax regime, but some transfer regimes are sharply degrowth.”
That’s of particular importance in Michigan these days as efforts continue to repeal the property tax via a ballot proposal.
“(O)ur latest paper is trying to fill what I think is an important gap, because a lot of the conversation around property tax elimination has really been half of a conversation,” Walczak told podcast host Stephan Currie. “It's been, essentially, ‘Wouldn't it be nice if you didn't have to pay property taxes?’ with very little grappling with: What's the alternative?”
In short, there are no good ones, Walczak explained.
“Statewide in Florida, you'd need about a 15.3 percent sales tax rate (to replace property taxes there) … But if you did that on a county-by-county level, it would range from 9.8 percent to 32.5 percent, based on which county it is. Because if you have a retail concentration, or you've got a lot of tourism, you can raise a lot of revenue. on your base. If you're an agricultural area, if you are a bedroom community, if there's just not a whole lot of retail activity going on in your jurisdiction, the rates necessary to offset that revenue are going to be ludicrously high, and that's before we think about cross-border shopping. …
“Fundamentally, as unpopular as the property tax can be with some people, it's a tax that really corresponds reasonably well to the benefits you're receiving,” Walczak said. “It makes sense as a tax; that's why it's economically efficient. It's not perfect. We can always talk about ways to make it better, and I think in an environment where assessed values have risen rapidly, and sometimes people are paying a lot more, those are conversations that are absolutely worth having.
“But it's about improving a system, not eliminating it.”
See video versions of all Podcast 83 episodes on YouTube at https://www.youtube.com/@michiganassociationofcount2606
Visit the Podcast 83 page at www.micounties.org
