Source: Sherman Publications

Remove Images

My Way
My Way
Tax abatements for the few? No! Tax cuts for all? Yes!

by CJ Carnacchio

March 16, 2011

Some folks out there favor the idea of government giving tax abatements to businesses in order to spur economic growth.

The logic is a business that spends less on taxes is more willing to reinvest in equipment and facilities, expand its operations and hire more employees.

In turn, this growth leads to more taxable revenue for government.

While I definitely agree that taxes are a significant hindrance to economic growth and entrepreneurial vigor, I don't think abatements are the answer.

I'm opining on this subject this week because two manufacturers in Oxford Village Royal Oak Boring and Royal Oak Medical Devices have approached the municipality about giving them each 12-year abatements on their personal property taxes.

The companies plan to spend a combined $3.95 million on new equipment for their village facilities and as a result, hire 23 new employees. That's definitely great news and should be applauded.

However, to me, if you have to offer businesses property tax abatements which are essentially bribes to lure them here or convince them to reinvest in your community then your taxes are too high to begin with.

Case in point, the village alone levies 10.62 mills, which is a ridiculously excessive tax rate to provide services for a 1.4-square-mile area. Businesses don't care that the village has its very own police department and DPW; all they see is a high tax bill.

School districts around the state, including Oxford, practically rape local businesses with their ability to levy up to 18 mills on non-homestead properties.

Add in the 6-mill State Education Tax and businesses pay 24 mills for public education not including all those wonderful extras like bond debts and sinking funds.

If you ask me, the answer to stimulating local economies is not tax abatements for the few, it's tax cuts for everyone coupled with the wholesale downsizing, elimination and consolidation of local governments and school districts.

Let's save village taxpayers 10.62 mills by dissolving the unnecessary and costly village government once and for all.

(Actually, the savings would be 7.7048 mills because village residents would begin paying the township's police tax, which is still lower.)

Let's reform school funding in this state, so we're not robbing businesses by forcing them to pay four times what the average homeowner pays for public education.

Between property taxes and the constant stream of donation requests from various clubs, sports teams and booster groups, local businesses have a tremendous weight put on them by the schools.

Instead of abating personal property taxes for businesses, we should be looking at abolishing them altogether.

It's ridiculous that we tax the equipment and furnishings businesses use.

When a business purchases new machinery, computers or even office furniture, they should pay the sales tax and be done with it. They shouldn't be taxed on these items year after year after year.

While we're at it, we should be looking at abolishing real property taxes as well. And not just for businesses, for everyone.

Instead of taxing people's property, which is an antiquated and inefficient way of doing things, all governments should rely primarily on a system of sales taxes to generate their revenues.

Sales taxes are by far the fairest way to tax people because they're based strictly on consumption. Those who consume more, pay more in taxes. Those who consume less, pay less in taxes.

Essentially, what a person can afford coupled with their spending habits determines how much they pay in taxes.

The bottom-line is we need to reform the whole tax system at the local and state levels instead of having communities use abatements to prostitute themselves.

If the government officials who offer tax abatements are the pimps, what do you think that makes us?