At a recent School Committee meeting, Bruce Leicher and Stu Sklar pointed out an inequity that they perceive in the town’s property tax structure. Bruce noted that the average tax bill in Harvard is about $8,500. For a household that makes $25,000 per year, the $8,500 figure represents 34 percent of their income; whereas for one with an income of $250,000, it only represents about 3.5 percent of their income.
Their solution: have a “progressive” town income tax of 2 percent. Then the revenue obtained from the property tax could be reduced to about one half of its current level. They claimed that the total taxes paid by each household would then be more “progressive” with this approach and alleviate the inequity.
I commend Bruce and Stu for their creativity, but need to point out some flaws in their concepts and calculations. First, a fixed-rate income tax is not “progressive”. It would be progressive only if the rate of the tax increased with the income on which the tax was paid.
Instead, the fixed rate income tax is “proportional” since it is proportional to your income. As a matter of fact, so is the property tax since it is proportional to the value of your property.
This is the second problem. Bruce, in his example, used the same average tax bill in Harvard to calculate the percentage of their income paid by the low and high income households. It is intuitively obvious, however, that low income households tend to own properties with lower values; so their property tax bills are lower. On average, the low income and high income households both pay about the same percentage of their incomes in property taxes. Therefore, the inequity of the property tax structure, for the most part, doesn’t exist.
ANTHONY J. MAROLDA