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Responsibility #71
To the People of the United States of America:
Fifth postscript, August 1993. A Chicago Tribune article (republished in a newspaper in another state on August 20, 1993) had the following headline: "Michigan's big gamble on education funding--State kills property taxes, lacks new source of cash".
Quoting from the text: "In a startling move that will be watched closely by most other states, Republican Gov. John Engler on Thursday signed into law a repeal of all property taxes for public elementary and secondary education, beginning next year. The action is all the more remarkable because Michigan legislators have not decided how to replace the estimated $6.3 billion that public schools will lose as a result of the repeal. As part of the debate over how to replace the lost revenues, which account for two-thirds of the money spent for elementary and secondary education in Michigan, Engler and his allies hope to push through a far-reaching overhaul of the education system and adopt a version of 'school choice' plans long advocated by conservative Republicans."
Justification for Michigan's action, and an answer to its resulting funding dilemma, have been presented in previous RESPONSIBILITY papers.
In Responsibility #50 through #52, inviolable principles were developed to govern the generation of federal revenues and the expenditure of federal appropriations, so as to control federal omnipotence, and maintain justice for all. The arguments are appropriate to states as well.
Three of the principles directly apply to the progressive Michigan action. He who receives the benefit pays the cost. The source or sources of revenue to meet an appropriation will be selected, so as to fulfill that principle with the least inequities. Collect revenues in the most efficient manners at the most appropriate levels of government, allocating and forwarding the receipts to the proper destinations designated to manage and expend the appropriations for which the revenues were collected.
As the nation now is, property taxes, as a source of revenue for funding education through high school, does not fit these three principles well. Relatively, the owners of real property are at most very indirect and limited recipients of the benefits derived from the education of the nation's children. As a source of funding for education, property taxes are very inequitable. Land, buildings, and equipment intensive businesses pay through the nose. While labor intensive businesses get off relatively easy, despite the fact that they are much more dependent on an educated labor force.
Children in the same school or school district receive the same education, despite the fact that their parents may pay zero, low, moderate, or heavy property taxes. All citizens and residents of the USA benefit from the education of those providing our products and services, yet they do not necessarily pay any property taxes.
At present the manner of setting, assessing, collecting, and expending educational funds based on property taxes results in great disparities in the quality of education that is provided to different students across a state and across the nation. More often than not poor families, weighted heavily in minority races, get the short end of the stick.
The resources available to school districts vary depending upon the residential property and industrial base within the district, and the tax rates the citizens permit the legislators to enact. A school district that has expensive homes and/or one or more large manufacturing firms is likely to be a "fat cat", having lots of tax revenues to spend on education. School districts encompassing low price homes and little or no businesses have to skimp on the cost of education. [See Responsibility #31.]
Clearly revenues for education should be pooled on a statewide, if not nationwide, basis to provide the means for equal education opportunities.
Considering the above arguments, rationally Michigan (and the other 49 states) should replace the funding of education from property taxes by other tuition taxes levied on substantially all direct recipients of the benefits derived from the education of the nation's children. It follows that the tuition taxes should be shared by each and every business, and each and every citizen and resident of these United States.
The most appropriate candidate, for the contributions by businesses, would appear to be a levy based on a percentage of the total wages and benefits paid to their work forces. The impact of the change would vary from business to business. Where the new tuition taxes exceed the previous property taxes, the change would be partially alleviated by a decrease in federal (and state, if applicable) income taxes. Vice versa for businesses where lower education taxes result. These statements follow from the fact that both forms of education taxes are legitimate business expenses, directly effecting net (income taxable) income.
The contributions by citizens and residents would appear to be achievable best through the individual income tax. This would entail a resolvable problem for states that have not enacted state income taxes.
The most equitable and efficient arrangement would be to have the federal government collect, but disburse proportionately on a per pupil basis to the states, the tuition taxes from both businesses and individuals. This would be palatable only if the funds were committed irrevocably to the states, and if the federal government limited itself to setting or coordinating "top (national) level" education parameters. [Refer to Responsibility #34.]
The state of Michigan has stepped to the fore, in actions to reform property taxes and education funding. The Chicago Tribune article indicates that the Governor will push in debate "a far-reaching overhaul of the education system and adopt a version of 'school choice' plans". As covered in these RESPONSIBILITY papers, it is essential that education reforms cover all major problems effecting the quality of results (organization, curricula, moral teaching, discipline, drugs and alcohol, guns, gangs, etc.).
It is clear from the first 7 to 8 months of the Clinton presidency, and the 103rd Congress, that we have no concerted determination at the federal level to act now, to effectively solve our nation's problems. So it is essential that We the People through our states pick up the torches, to arrest the decline and fall of America. This is the cause celebre and raison d'etre of these RESPONSIBILITY essays.
Publius IV
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