A typical full-time state or local government worker made $78,853 in wages and benefits in the third quarter of 2006, $25,771 more than a typical private-sector worker, the Bureau of Labor Statistics reports. The difference was $7,604 in 2000. The compensation advantage holds true for all types of public workers, from teachers to laborers and managers.
By John Stallcup
From the early days of the United States, with minimum regulation, over 1,600 state-chartered, private banks issued paper money. These bank notes, with over 30,000 varieties of color and design, were easily counterfeited, causing widespread confusion and mistrust. With no common national currency there was no confidence in the value of any given dollar.
After nearly 100 years the anti-federal-control politicians finally threw in the towel. Teetering on the brink of bankruptcy and pressed to finance the Civil War, the 37th Congress authorized the U.S. Treasury to issue paper money and the U.S. finally got what it desperately needed: a common currency.
What makes any currency (or diploma) valuable? The perception and confidence in it based on the belief that its exchange value is at parity at the time of the exchange. Today, one $10 bill has the exchange value of any other $10 bill – not so for a high school diploma.
In the United States, the power to define what standards a student must meet or exit exam they must pass in order to receive a high school diploma has been the responsibility of the states. With few exceptions the states have failed miserably. Until we have specific national content standards and a national high school exit exam the high school diploma will continue to be a counterfeit currency and an outright shame.
When property tax began, land (and improvements) was the primary form of wealth, so it was much nearer to being a duty on prosperity than it is today. Many of the other federal taxes, such as taxes on electrical energy and telephone calls were for nominal amounts and often unknown to consumers.
Property taxes, on the other hand, required taxpayers to make an unequivocal tax payment of considerable size from which the taxpayer could not avoid without losing what was often their most significant piece of property and wealth.
Originally property taxes were collected and used only by the State government. The first significant change in property taxes came in 1839, when growth and political pressure broadened the definition of taxable property, narrowed the scope of exemptions, and identified personal property subject to taxation. In addition, counties were provided the ability to tax personal property.Chicago assumed a leadership role in this revolt. Its citizens, enraged over corrupt practices in property tax assessments discovered before the Depression, and stressed in their ability to pay the toll joined together and refused to pay taxes.
An amendment to the 1870 Constitution, following the passage of the Illinois Income Tax of 1968, eliminated taxes on personal property for individuals and as provided by the 1970 Constitution, corporate personal property taxes were eliminated in 1979. They were replaced by a corporate income tax and a tax on the invested capital of public utilities.By the 1980's the baby boomers had passed through the public school system. Rural communities began losing their schools due to declining or stagnating population and tax bases. Property values would often decline with the loss of schools. Rising property values in the large cities led to suburban sprawl as parents became willing to commute to work in exchange for lower housing costs and better funded schools. Property tax rates are usually lower in urban cities but the out-of-pocket taxes are generally higher than in rural communities with lower property values. Moving to adjacent communities meant bigger homes for less money and even if taxed at a higher rate they felt their children received a bigger bang, in terms of quality education, for their property tax dollars.
Soon the rural school districts began crying foul because of the mounting funding inequities. State governments, including Illinois, tried to balance the gap by reducing the amount of state aid to the wealthier (in property value) school districts.
The state governments simply could not keep up with the rate property taxes was increasing. The percentage of overall school revenues from the state dwindled lower and lower.
Because funding inequities exist both within and between states and because many rural communities felt shortchanged by legislators their arguments were brought to the courts. After all, doesn’t the Constitution guaranty equal rights for education?
In 1981, the State changed the basis of assessing farmland from that of the actual market value of the land to the farmland’s agricultural economic value. Basically, the land was valued at its’ ability to produce, which was based upon its’ soil type, drainage and other agricultural economic factors. The need for this change was due to the conversion of farmland for development, which was artificially inflating the value of the land and placing an unfair tax burden on the owners of land still being used for strictly agricultural purposes.Real estate ownership is a measurement of wealth as an asset. It is also a primary source of debt for most homeowners. Failure to pay property tax, voluntary or involuntary, results in the loss of all money invested. A decline in income due to loss of job or spouse can result in the loss of a home for someone who cannot afford their property tax bill.
Rising property values increases long term wealth and shorter term borrowing power. It can also increase out-of-pocket property taxes even if taxing bodies reduce their tax rate. The damaging results are families and seniors stressed to meet housing costs in mortgages, rents and taxes.
One reason school officials are reluctant to their funding shifting from property tax to income tax is that the former offers a much more stable source of revenue than the latter. What is good for the goose is a burden to the gander.
Perhaps those who truly want education finance reform would be served well by studying the tax revolts of the 1930s.
