What the Devil won't tell you
Ad debunker: Tucson taxes nowhere near the country's highest
We don't come close to stacking up against truly tax-stricken cities
I've already thrown in my two cents about my doubts regarding the Strong Start Tucson ballot measure to increase, by a half-penny, city sales taxes to pay for preschool education. The initiative just isn't thought through and puts off too many decisions until after voters approve it.
However, there's an ad on television (and running as a campaign ad on this very website) purporting the give out "the facts" about Prop. 204 and the worst among them suggests if voters approve Strong Start, then Tucson will become "one of the highest taxed cities in the nation."
It's a dangerous alternative fact to spread around because it preaches a bad-faith gospel in our city. In no way are Tucson households just $36 per year from bearing one of the heaviest tax burdens in America.
Read Morlock on Prop. 204: Strong Start Tucson's flawed conception undermines noble effort
If Tucson City Council were to jack more cash from constituents than any other city in America and still can't fix a pothole, then that would be criminal. If site selectors from major businesses looking to relocate buy into that convenient political soundbite, it's lights out for our economy.
It's just not true.
Our city's taxes may be too high for Tucsonans to swallow. That's legit and it's a community decision to figure out how much we are going to put into common investments and spending. I know some folks who think any taxation is outright theft. That's not what we're talking about.
Sum of all taxes
Look where we live.
Tucson is in Arizona. Arizona has some of the lowest taxes in the country because conservative legislatures and a succession of governors designed it that way. What's more, the state has limits on bonding, what school districts can spend without overrides, and how much cities can charge in terms of property taxes. It's all meant to keep Arizona's taxes low and it's worked.
So, here in Tucson, the property tax rate for individuals hovers around 1 percent, sales taxes are at 8.6 percent and state income taxes top out at 4.54 percent.
Those are the three stools of public sector revenue, unless you are like Alaska and have special deal for oil revenues. Arizona is oilless, you might recall. Petroleum is not among the Five C's nor the Five T's.
In 2016, the Lincoln Center for Land Policy in that right-wing hellhole that is Cambridge, Mass., did a study of cities with the highest and lowest property tax rates. Bridgeport, Conn., led the way with 3.88 percent, followed by Aurora, Ill. and Detroit at over 3.5 percent. The lowest? Honolulu, Cheyenne, Wyo., and Denver. They ranged from .3 percent on Oahu to .66 percent abutting the Front Range.
The average tax of 53 cities surveyed was 1.5 percent.
Getting this? Tucson's property tax is less than a third of the way to the highest rates in the country and two-thirds of the average tax rate. It is just .7 percentage points higher than lowest in the country but 2.8 percentage points from the highest. So we know we're not paying particularly high property taxes.
(Right here, we're into the swampy reality of comparing one tax to another. Pima County taxes bills seem straightforward. Add up all the rates on the bill and crank the applicable property value through those rates and come up with a number. It's just that in Arizona, there's a hidden tax break, which is that the tax rates tend to lag a year or two behind the home's value that year. The assessed valuation, no matter what the Assessor's Office says, lags about 20 percent behind the market value during stable times. The same is not the case in, say, Baltimore.)
How about income taxes? Are they through the roof?
Hardly. Of the 44 states that charge income taxes, Arizona's top rate is the 5th lowest. Only Indiana, Pennsylvania, North Dakota and Michigan ranked below us. So Arizona has the 11th lowest income tax in the country.
Tucsonans pay zero city income taxes. Yes, natives, this is a thing. Municipal income taxes, typically between 1 and 4 percent, are routine throughout the country but not here in Arizona.
So now we're left with sales taxes and, yes, sales taxes in Tucson are among the highest in the country and that's for a reason. The most recent national survey I found was from last year when Tucson ranked 48th nationally, according to the Tax Foundation. Then we passed a public safety tax hike of 0.5 percent and jumped 24 spots to No. 24 — tied with Phoenix. Were voters to approve the .5 cent sales tax for early ed and the .1 percent sales tax for the zoo, the city would rank 11th in the country when it comes to business privilege taxes.
So, yes, the city would rank among the highest cities in the country vis-à-vis the sales tax but that's just one kind of tax. Wilmington, Del., has no sales tax and yet somehow residents there have among the highest taxes in the country.
Trying to stay neutral, here
There's a method to the madness.
Say I'm a business interested in coming to Tucson and I'm looking for a city to relocate. I want the roads. I want the schools. I want safe streets and pleasant parks. In other words, I want all the trappings of an advanced economy found in Aurora, Ill., or Bridgeport, Conn. I just in no way want to pay for it. Hey, I'm bringing jobs. Ain't that enough?
So, how does a state go about making sure that business and the well-off who make the decisions get all the fun and serenity of Western civilization but at a discount?
The answer is "neutral taxation."
Look, if I decide to invest $100 million into a community by turning vacant land into a call center, high property taxes would "punish" that investment decision. Progressive taxation is also seen as "non-neutral" because if I work harder, invest better and make more money, I get penalized for those decisions with higher taxes. Corporate taxes? Not on your life.
Sales taxes, on the other hand, are more neutral. Everyone pays the same percentage. So, if I can get a tax model that is entirely about the sales tax, I'm as happy as I can be absent anarchy. In fact, you may have heard about such an approach called "the Fair Tax," so named because life is so unfair to the wealthiest among us. It would replace all federal taxation with a single consumption tax.
These kinds of taxes are referred to as "pro-growth," and in a way they are because people get to keep the more of the fruits of growth they create.
Every state charges taxes because stuff costs money.
Arizona's Legislature has wired up taxation in the state to rely more on sales taxes. Judging who pays the most taxes is just a question of whose ox gets gored.
Under the Wire
So how does this work in the real world and where do we rank? Let's take a look at Tucson versus a real high-tax red state city.
I'm going to throw out another survey of lists that populate the interwebs, a la WalletHub, that ranks Baltimore as the 10th most taxed city in the country. Are we in danger of breaking into their Poe-like horror of rampant government suckage?
Let's take the average Tucson Juanita Sixpack.. She's living in her home valued at the median home price here in Tucson ($167,000). Last year she paid $1,215 in local property taxes and her husband and kids together are kicking about $600 a year for sales taxes. She's and her husband pay 3.36 percent on her income — and let's just say she's only claiming one standard deduction: $1,176.
That's about $2,991 per year in (non-federal) taxes on a Tucson family.
Now let's put Juanita in Baltimore. The taxes on a $167,000 house run $4,100. Her Baltimore city income tax costs $1,488 in addition to her $1,852 state tax bill (using the same basic standard deduction). She's at $7,448 before she even buys so much as a milk shake. If she just pays proportionally the same sales taxes, that's another $400 meaning Juanita is taxed about $3,000 more per year for living in Baltimore than she does living in Tucson.
And Baltimore is far off from Bridgeport.
I'm in no way suggesting that Baltimore is a model for Tucson. I'm saying Tucson is no Baltimore (just as it isn't "Detroit," talk-radio listeners) and is in little danger of loading such a tax burden on residents.
Spreading the falsehood that Tucson's taxes lead the country is proselytizing a faith in local incompetence that is beyond biblical and dangerous for our economy.
Comparing taxes from one city or state to another is tricky. All sorts of "ifs," "ands" or "buts" are involved with who is getting stuck with the burden.
Comparing a relatively low-tax major city like Tucson to a truly high-tax city like Baltimore is easy to eyeball.
Opposing Prop. 204 ain't hard. Laying out a case against it is like shotgunning bass in a barrel. Facts work just fine. There's no need for their alternative.
It's fine site selectors. Come look around. Just don't ask about all the Mattress Firms. None of us can figure it out either.
Blake Morlock is a journalist who has spent 17 years covering government in Arizona and also worked in Democratic political communications. Now he’s telling you things that the Devil won’t.