Don’t let politicians and the media hide tax increases from you.
My favorite example comes from property taxes. You calculate property taxes from two numbers – the assessed valuation of the property times the millage rate.
Politicians and the media focus on the millage rate.
How often have you heard politicians exclaim, “I did not raise your taxes?” when they mean they didn’t raise your millage rate?
What they seldom tell you, and the media likewise, is they voted to approve the tax rolls. Tax rolls set the assessed valuation for each piece of property each year. When politicians vote to approve higher assessed values for your property on the tax rolls, they’re actually voting for higher taxes… unless they also vote to lower your millage rate.
Politicians love for tax roll values to increase because hardly anyone, including the media, shines a light on that part of the tax calculation.
Be aware, too, that you have little say so when local government decides to increase your property values. There is a window of opportunity between when the tax rolls are presented and when they are approved for you to appeal. But, you’ve got to have evidence to show the tax assessor was wrong.
Then there are underexposed, automatic tax increases…like sales taxes. Sales taxes automatically generate more tax revenue when the value of the item taxed goes up.
In 1992 milk cost about $2.78 per gallon, today about $3.94 per gallon. The sales tax rate has been a flat seven percent over that time, but the tax amount you paid went up. Since inflation pushes the cost of just about everything up over time, a percentage tax like the sales tax automatically increases the taxes you pay.
That’s normal, you and the media might say.
Not exactly. Consider gasoline taxes. In 1987 when a gallon of gas cost about 95 cents, you paid 18.4 cents in taxes. Today you pay the same 18.4 cents in taxes for gas that costs around $3.49.
This shows that taxes on milk and other items don’t have to go up when values or prices go up.
By using percentage rates like millage rates and sales tax rates, politicians get to raise the tax amounts you pay without having to vote on the increase. In effect, they hide behind the taxing mechanisms they establish.
The current fight over the gasoline tax brings this to light. Anti-tax Republicans who control the Legislature are afraid to vote for higher gas taxes because that’s an out front, exposed tax increase. But, they are perfectly content to allow underexposed, automatic tax increases on food and other living essentials.
If they can hold the line on gas, they can hold the line on a lot more. Shine the light, media.