I came to the U.S. in 1992, and after all these years I still can’t get used to the obscene idea that local public schools are funded by local taxes, and not by an equitable national budget. Every kid should get the same opportunity. It should *not* depend on local wealth.
— Ami Dar (@AmiDar) December 18, 2020
So . . . I'm generally sympathetic with the tweeter's view, but the facts of the case are frequently more complicated. For example, at least in Minnesota, where I live, "local taxes," in the form of the tax on real property, provide no more than a third of the funding for public schools. It would be awful if the schools ran only on property tax dollars, because then what the tweeter calls "local wealth," meaning I assume property tax base, would indeed limit educational opportunities for students in poor districts. The rich and poor would have the same lone method of raising money, but the more affluent districts could raise more by imposing a lower tax rate on their local properties, which on average are worth considerably more than the properties in poor districts. Moreover, wealthy districts tend to have fewer needs, since the high home prices have the effect of screening out, for example, students requiring ESL or other special instruction. Greater needs and less tax base mean higher tax rates, which makes poor districts even less desirable places to live, which drives down home prices further, which means either tax rates have to be yet higher or needs left unmet—a downward spiral of doom.
Minnesota, recognizing this weakness, has state government kick in for public education generally about twice as much as comes from the local property tax. The state money is not distributed evenly to all districts but rather according to complicated considerations and formulae relating to things like disparities in tax base and the needs of individual districts: in other words, what some people call "socialism," since you get more if you need more. The idea, to revert to the tweeter's language, is to make it so that educational opportunities, and the overall quality of public schools, don't "depend on local wealth." But it's an imperfect remedy. One good thing about the property tax is that land and buildings don't deliquesce and so are there to be taxed, in good times and bad. When, however, budgets are tight, state aid for public education is invariably on the chopping block: most taxpayers don't have kids in public school, and, even if they do, they're only hurt by a cut if they live in poorer districts that rely less on the property tax and more on state funds. The dynamic relating to the downward spiral is back in operation. The tweeter's fundamental complaint is sometimes confirmed accidentally—for example, if you are perusing real estate listings in the Lake Minnetonka area, you will see again and again things like EXCELLENT PUBLIC SCHOOLS! or SOUGHT AFTER WAYZATA SCHOOL DISTRICT! The home price is usually half a million or more. But suppose that, instead of looking in the Lake Minnetonka area, you filter only for price and search for homes anywhere in the metro listed for less than $175,000. Now you don't hear so much about the schools.
Since property taxes bankroll nearly everything local government does, the inequities connected to school funding apply comprehensively. To continue picking on Wayzata, its needs for police and fire and streets and utilities and parks & rec and public library, etc., do not exceed Brooklyn Center's need for the same services. And, again, the two cities have the same means of raising revenue for these services, which are purchased in the same market place. But Wayzata is way richer. It can raise all the money it needs by taxing its valuable properties at a relatively low rate. That is why someone who owns a $300,000 home in Wayzata (if there are any that affordable) pays less property tax than someone who owns a $300,000 home in Brooklyn Center (if there are any that expensive). It seems to me there is a "good government reform" that would address the inequities in a more thoroughgoing fashion without enlisting the feds in the way the tweeter suggests. Why do we have this confusing checkerboard of literally hundreds of different taxing authorities across a single metropolitan area? The boundaries between them are artificial and relate in no meaningful way to how people live. Your home, which is determinative for local tax purposes, is in a particular municipality, sure, but you might work in a different suburb from the one in which you live while shopping for groceries in a third, going to church in a fourth, hauling your kids to music lessons in a fifth, and attending sports or cultural events "downtown." While prosecuting the daily routine, you aren't even aware of all the tax boundaries you're crossing, but, for some reason, the location of your bed is all that matters for determining your tax bill.
A single, interdependent metropolitan area should have a single uniform tax structure that applies throughout the region. If the checkerboard were eliminated, the inequities identified by the tweeter would be ameliorated, and the region as a whole would be healthier.
Indianapolis, on the initiative of Republican mayor Richard Lugar, instituted such a reform in the 1970s, and it was successful and popular enough so that Lugar was soon elected to the US Senate (where he forsook his previous interest in metropolitan governance and became a foreign policy maven—his political brand is as extinct as tyrannosaurus rex). I'm not sure why the idea hasn't spread. In Minnesota, we have "fiscal disparities" laws that recognize it wouldn't make sense if, say, Bloomington got to keep all the city share of the property tax generated by the Mall of America. That would be great for homeowners in Bloomington, whose tax bill would be reduced considerably, but instead the tax revenue generated by the Mall is distributed across the metropolitan area, on the theory that it and other valuable commercial properties are regional assets. But if it wouldn't be right for Bloomington to reap the tax benefits generated by the Mall of America property, why is it fine that toney suburbs get all the benefit of their expensive residential housing? They have the greatest resources (lots of valuable properties to tax) and probably the fewest needs (because the expensive housing tends to screen out people who need government services). So they ease along from year to year, relatively low tax rates and relatively high levels of local government service—certainly all the cops they need, nice parks, summer rec programs for kids, not a lot of hand wringing over the municipal budget. Meanwhile communities not 15 miles away, unambiguously part of the same metropolitan area, struggle to avoid the downward spiral of doom. The property wealth within their little square on the checkerboard isn't enough to meet basic needs.
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