County Sales Tax Referendum

If you live in Milwaukee county one question you will be faced with is whether or not to raise the county sales tax by 1 cent per dollar spent. This translates into a tripling of the current tax rate from .5% to 1.5%.

The increase in the tax will be ostensibly to offset property taxes. This is the same rationale that was used in the early 1990s when the County first imposed the tax. If you haven't noticed, property taxes have skyrocketed throughout the 90s and into the 00s. So trusting the County Board to provide long lasting property tax relief is a bit of a stretch.

So why is the tax being proposed and is it a good idea?

Not unlike the automakers that are currently in crisis, Milwaukee County is burdened by massive legacy costs. Legacy costs are defined by pension payments and health insurance payments to employees who have retired. This issue became an even bigger problem a few years back when the Board and Tom Ament passed a nice pension sweetener that they are now taking advantage of. A huge percentage of the County's budget is to pay for people who are no longer serving the County.

Like any proposal to increase tax the Board has said that we need this for Parks and Transit. Parks and Transit are two things that most of us like and would like to be supported. What is interesting is that the budgets for these two areas has remained stable that last few years. So do either of these areas need an isolated tax stream? I'm a person who uses the parks quite a bit for biking and golf and i have not seen a real decline in the quality of the park system.

I would argue that if it wasn't for the pension scandal, county finances would be in good shape. So I'm not sure giving the Board more money is a real sound idea as they created the mess that we are in.

The next issue to consider is assuming the board could be trusted, is it better to shift the tax burden to sales tax rather than property tax. I believe this has some merit as I believe the most effecient way to tax is through consumption. You also get the added advantage of collecting the tax from visitors who are not in the area. Yes, some businesses who deal in high price items such as cars could be adversely impacted, but I do not think people will change the vast majority of their shopping problems and the impact to business has probably been overstated by some of the critics of the increased sales tax.

The other positive of shifting the burden away from property taxes is the one tax people tend to pay real attention to is their property tax. Property tax is one of the few taxes that people actually write one lump sum check for. Therefore people tend to notice when it goes up and perhaps they will pay increased attention to their bill if the provision passes. The trouble is the increase in property taxes have far outpaced inflation and taxpayers have done little to stop that.

Shifting the tax burden has merit, but unfortunately one can't trust the board to be responsible in their spending and hold the line on property taxes, so I wouldn't recommend voting for this. I think if it passes we will simply have a higher sales tax and property taxes will continue to go up.