Opinion: Vote Yes Nov. 5 to Eliminate Nuisance Taxes

Bill Foster, who represents Newtown Boro and Newtown Twp #4, #5, #6 voting districts on the Council Rock School Board, submitted this letter to Patch.

Would you like to eliminate two inefficient, time and money wasting taxes and prevent a real estate tax increase that would disproportionately burden the retired and unemployed?  Then vote "YES" on the Council Rock School District Referendum to Eliminate the Occupation and Per Capita Taxes

A "YES" vote will eliminate the wasteful Occupation and Per Capita taxes.  These two "nuisance" taxes cost taxpayers twice as much to collect as real estate taxes while generating 30 times less revenue.

 Where is the waste?  It's in the expense of tracking and every year updating the age and occupation of every resident in the School District, in processing and mailing 55,000 Occupation and Per Capita tax bills, it’s in spending over $200,000 per year in collection fees and overhead to collect only about two percent of the District's annual budget.  An outstanding example of this?:  21,000 Per Capita bills that cost $2.50 are for only $9.80.  A whopping 25% of the tax is spent just on sending the bill! 

Beyond the wasteful overhead, the Occupation Tax is confusing and unfair.  There are 12 tax brackets covering 390 occupations.  The District must keep track of the occupations of all its residents and fit them into one of the 390 categories.  Still, there is no clear logic to the tax structure: a dance instructor pays as much as a physician's assistant and more than an anesthetist, a realtor pays the same as a professional athlete.  And the tax is no less, and no more, even if one dance instructor or realtor earns ten times more than another, or if one becomes unemployed or retires during the year. 

Given the inefficiency and complexity, there must be another way.  But what?  Some other school districts have elected to fund their budgets with no Occupation or earned income taxes and instead have higher real estate taxes.  Real estate taxes make up 3% more of the Central Bucks School District’s budget than Council Rock’s.  Pennsbury real estate taxes make up 7% more of the school budget than Council Rock’s.  Higher real estate taxes disproportionately affect the elderly, the retired and the unemployed.  That is not better for Council Rock. 

Fortunately, "YES," there is a better way.  A "YES" vote on November 5 will eliminate the Occupation tax and replace the 12 tax brackets with a one-bracket, flat tax rate on earned income of 0.17% (about 1/6 of one percent).  That flat rate tax amounts to $170 per $100,000 of earned income and excludes income from Social Security, pensions, capital gains, dividends and interest. 

A Yes vote to eliminate the Occupation Tax also forces the school board to eliminate the Per Capita tax, since without Occupation Tax bills to combine with in mailings to save costs, all Per Capita Tax bills will cost 25% of revenue to collect, not a defensible approach to taxation.

What is a "no" vote?  A "no" vote leaves the District with two choices: continue with the inefficient, complex and unfair Occupation and Per Capita taxes to fund 2% of the District's budget, or follow the lead of many surrounding districts and move the tax burden to real estate.  In the current budget, to get the same revenue generated from the Occupation tax from real estate taxes would mean a 3% increase in real estate taxes.

A "YES" vote, on the other hand, is a vote for fiscal responsibility, for lessening the tax burden on the retired and the unemployed, for lesser reliance on real estate taxes, for simplification of the tax system, for reduction in the cost of tax billing and collection and for the elimination of the Occupation and Per Capita taxes.

To learn more about how a "YES" vote will affect your taxes, the Council Rock School District has placed a tax calculator and presentation on its website, www.crsd.org.  Say no to inefficiency, waste and unfairness by voting "YES" on November 5. 

Bill Foster, Ph.D.