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Tax and Spin–Part 7: Eliminating confusion-Step 2

This entry is part 7 of 11 in the series Understanding Property Tax Levies

taxBallot Example No. 2

The second ballot, presented in November 2001, is for a “replacement and increase.” It replaces a 0.3-mill existing levy and adds 0.2 mill:

“1 PROPOSED LEVY – (REPLACEMENT AND INCREASE)
GREENE COUNTY COMBINED HEALTH DISTRICT

A Majority Affirmative Vote Is Necessary For Passage.

A replacement of 0.3 mill of an existing levy, and an increase of 0.2 mill, to constitute a tax for the benefit of Greene County for the purpose of PROVIDING THE GREENE COUNTY COMBINED HEALTH DISTRICT WITH SUFFICIENT FUNDS TO CARRY OUT ITS HEALTH PROGRAMS INCLUDING BUT NOT LIMITED TO CHILD AND SENIOR CITIZENS SERVICES, CONTROL OF COMMUNICABLE DISEASES, FOOD AND WATER PROTECTION, HEALTH EDUCATION, AND AIDS/HIV DIAGNOSIS AND EDUCATION at a rate not exceeding 0.5 mill for each one dollar of valuation, which amounts to $0.05 for each one hundred dollars of valuation, for a period of 5 years, commencing in 2002, first due in calendar year 2003.”

This proposal amounts to two tax increases in one vote: the hidden increase in the replacement tax part of the levy and the obvious 0.2-mill increase.

The proposed tax for just the 0.3-mill replacement tax part of the ballot was this amount: 35% X $100,000 X $0.0003 X 87.5% = $9.19.

The 0.3-mill tax includes a hidden increase because what is not shown on the ballot is the effective rate of the existing levy that was to be replaced, which was only 0.283881 mill. Had the existing levy been renewed rather than replaced, the cost would have been this amount: 35% X $100,000 X $0.000283881 X 87.5% = $8.69.

Therefore, just the 0.3-mill replacement tax is nearly 6% percent greater than the existing levy. That’s without the obvious 0.2-mill increase.

The cost of the entire 0.5-mill proposal was this: 35% X $100,000 X 0.0005 X 87.5% = $15.31, which was a 76% increase over the existing levy.

Next–Part 8: Eliminating confusion-Step 3

Series NavigationTax and Spin- Part 6: Eliminating Confusion- Step 1

Posted in Commentary, Economics, Education, Private Property, Public Policy Principles News, Public Policy Radar, Taxation.