Fixing the Property Tax to Pay for Schools Problem

I want to start the discussion with certain basic ideas:

1. There is no free lunch. We pay for goods and services wherever we get them.
2. Education is a state responsibility

So, the questions we have to ask are,

1. Is everyone paying equally?
2. Are all children of New Hampshire getting the same financial support from the State for their education?
3. Does each district have the same chance of getting a good bang for the buck?

The answer to these three questions is “NO”.  To solve this problem we need a new source of revenue that will substitute for the school portion of the property tax, not be stacked on top of it.

The problem with our existing tax structure is that the costs are not fairly distributed;  children do not get fair and equal educations; and taxpayers in property poor towns do not get a good bang for their buck. People in Farmington pay a much higher tax rate than people in Moultonboro, or Newington. But we cannot claim that our schools are better than theirs.

One of the serious problems faced by people in property poor communities like ours is that when they retire and find themselves on a fixed income, they have a hard time keeping up with rising property taxes while their incomes remain level. They are often forced to consider selling the homes they intended to retire in, because they can't pay the property taxes. Working people also have trouble because the property tax rate can go up faster than any increase they may get in their wages or salaries. This puts local government officials in a bind. They know they need to raise more money in taxes in order to provide decent services, but they don't have the tax base to do that easily.  And they also know that increasing the property tax will put a strain on many of the citizens in the community.  A high tax rate, and a struggling school system also discourages younger families from moving in.

The state constitution says that the state is responsible for education. It does not say that local communities are responsible for education.  No local community has a law mandating public education. That is a state law. The State says how many days of school there must be in a school year. The State licenses teachers, requires that school districts provide superintendent services, and controls basic curriculum.  The State should pay for the public education it requires. This is no different from any other state responsibility.

The state must assume its responsibility. Cities and towns cannot create alternative sources of revenue. They cannot create a substitute for the property tax to fund education. The state has to do that. The important thing for the new legislature will be to find a new source of revenue that relieves property taxpayers but does not simply stack one tax on top of another. There is a way to do this. Whatever the new revenue source is, the law that creates it has to have written into it a provision that says the revenue from this new tax will be used to offset the property taxes paid by local taxpayers. 

For example , if the local property tax raised $100 statewide, and the new tax raised $105.00 then $100 goes back for tax relief to the local property taxpayers and $5 can be spent on state projects. If the local property tax paid raised $100 statewide and the new source of revenue only raised $95, then all of it would be used to relieve property taxes for local taxpayers and the local taxpayer would still pay $5 in property tax for education.

A state revenue source would take the burden off the back of the local property taxpayers, it would ensure that everybody in the state would pay their taxes at the same rate, that every child in the state would receive the same funding from the state for his or her education, and that every local community would have the opportunity to get the best bang for their buck.

What would the new tax be?  I would look at any idea, as long as the person offering it understands that it has to offset property taxes.  Someone in town suggested a marijuana tax, which would be borne by people who choose to use the substance; it could be an inheritance tax on large estates or estates where children do not inherit; it could be a tax on second homes over a certain value which would largely be paid by wealthy out of state citizens;, it could be an income tax that has the advantage of going down if your income goes down; a sales tax would be paid by out of state visitors as well as local people.  But the important thing would be that whatever it is, it has to be used to offset property taxes.