Quote:
Originally Posted by ASUSunDevil
"But the City’s investment could pay off big time, according to financial impact numbers calculated by its department of economic and community development. Those calculations indicate that Block 23 will likely generate $76.5 million in sales tax revenue during the course of its 50-year agreement with the City."
This is why the people that bitch about GPLET's piss me off. They don't comprehend the bigger picture and think that everything is 'unfair'
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The argument that a development will generate sales tax as a consolation for not generating property tax is not a proper justification.
Sales taxes and property taxes are not apples to apples comparisons in the following respects:
- First, property taxes generally go to pay for specific city resources such as a specific fire department or a specific school, while sales taxes just go into the general state and city budgets without necessarily being allocated. For example, the property taxes I pay on my house go directly to the elementary school up the street and the fire department that responds to my house. Sales taxes have no similar allocation.
- Second, property taxes are not paid at a standard rate like sales taxes. Property taxes are a zero sum game. The tax assessment is "backed into" every year based on that taxing jurisdiction's budget. When one property is taken off the property tax roll (i.e. The Derby) due to a GPLET, all of the other property owners in that taxing jurisdiction must make up the difference (i.e. Angel's Trumpet). This means their taxes go up dollar for dollar to make up for the GPLET. Again, it's a zero sum game. This is obviously very different from sales taxes. The amount of sales tax collected by "business A" (i.e. The Derby) has zero effect on how much "business B" (i.e. Angel's Trumpet) must collect.
I'm not a big supporter of the Goldwater Institute, nor do I have a strong opinion on any of these specific GPLET issues. I just want people to understand how these tax incentives work and make arguments for or against based on sound logic and analyses.