No surprise, really

Thursday, November 19, 2009

So, the tax rate in Merrimack is up – 23 cents for the town, 31 cents for the school. Naturally no one likes it, not even our elected officials who, after all, have to pay it, too.

What does it mean? Well, the owners of a house assessed at $300,000 will get a tax bill that asks for $69 more this year for the town and $93 for the schools, for $162 more in total locally.

That’s not all that much, but for some people, it’s going to hurt. People are still out of work, people are still struggling, and any increase in non-discretionary spending is unwelcome.

But when you have a tax system based upon property rather than income, this is what we have to expect – the property tax system is unforgiving. If you are out of work, it doesn’t care. You have to pay what the system demands or you run the risk of losing your home. That might not happen all that often, but it does happen, make no mistake.

We have, for many years, supported a change from the property tax to an income tax, believing that it is a better way to raise money because, to a certain extent, it is forgiving. If you make $100,000 one year but are out of work the next, you won’t pay the same in taxes because, obviously, your income will be much less and an income tax is exactly what the name suggests: a tax upon income. It is not a tax upon the absence of income.

But a property tax is a tax upon something that is purely theoretical: the value of your land and buildings. And their value is what someone – an assessing expert – says it is. You can challenge the assessment, of course, and you might even win, but in general, assessments are pretty accurate – the value is what it is and you will pay based upon what the tax rate is.

With an income tax, you pay based upon what you make and if you don’t make much, you won’t pay as much as someone who makes a much better salary.

In the past, the need for a change hasn’t been quite as obvious, but if you are currently a homeowner and you are out of work, check your property tax bill and see if there’s a space for “out of work, please cut my taxes.” Afraid not. You owe what you owe regardless, and you will pay.

Here we have to acknowledge those who don’t believe the adoption of an income tax will do anything to cut property taxes. They often cite states like Massachusetts as an example. We have problems with that argument, to wit:

• If Massachusetts had no income tax (and sales tax too, of course), property taxes would be much higher.

• New Hampshire is not Massachusetts; we can do better by our people.

It is time to take a hard look at changing our tax structure. It’s long past time, really, but now, with people out of work and the property tax saying, “Pay me anyway,” the issue is more urgent.

Just see the logic: An income tax is based upon what you make. It makes sense. The property tax was invented when property was, in essence, income. Those days are long gone. The property tax as primary money raiser should be, too.