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Thread: talk about 'gaming' the tax system

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    Banned Melonie's Avatar
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    Default talk about 'gaming' the tax system

    'democracy' can work in unexpected ways ...


    "Scottsdale Journal
    A School District With Low Taxes and No School


    By JENNIFER STEINHAUER
    Published: February 16, 2007

    SCOTTSDALE, Ariz., Feb. 13 — Just to be clear, Patrick Flynn says he loves public education. He just does not like the idea of paying for it.

    So when it came time last November for the expanding, unincorporated desert community of Troon to choose between joining a nearby school district, and paying higher property taxes to help finance it, or starting its own, Mr. Flynn led the movement that created the Christopher Verde School District.

    Not that the Christopher Verde district will have any schools, teachers or, apparently, students.

    The children of Troon will continue to attend nearby schools. And thanks to a loophole in Arizona law, the grown-ups of Troon will continue to avoid paying property taxes in those districts, which makes officials in the districts less than mirthful.

    “The whole purpose of this was to avoid taxes on their million-dollar homes,” said State Senator Linda Gray, a Republican who has sponsored a bill to prevent the formation of a school district without schools. (Ms. Gray conceded that there was at least one Flynn supporter who had “a half-million-dollar home.”)

    Beginning in the next school year, Troon students will now pay tuition to the school district they attend, and that money will come from part of the property taxes collected by the new Christopher Verde district.

    Even if Ms. Gray's bill, which the Senate passed last month, becomes law, the taxpayers of Troon will not be affected. The legislation would not be retroactive.

    “I am happy,” said Mr. Flynn, the president of a homeowners group in the area, which, he emphasized, had nothing to do with his opposition to higher property taxes.

    The quandary over what to do with the roughly 450 public school children in Troon and adjacent Rio Verde essentially pits older homeowners in a place best known for its excellent golfing against young families who are part of this rapidly expanding area in North Scottsdale.

    “By forming our own school district, the children will be educated by the schools they choose, and the residents will keep their tax rate the same,” said Mr. Flynn, a retired salesman whose children are grown.

    Casey Perkins, a parent with a young child, disagreed. “I am willing to pay for my own child,” Ms. Perkins said. “I am paying Social Security, and I am never going to see it. But both are part of living in our society.”

    It is a face-off increasingly common across Arizona.

    “The population and housing explosion of the past decade or so here has been driven by younger families, rather than by the traditional model of sun-seeking retirees from the Midwest or Canada,” said Stephen K. Doig, a census expert at Arizona State University.

    “Arizona is seeing more of the traditional battle of the generations,” Mr. Doig said, “between some retirees who want taxes — including school taxes — kept low, and most parents who want better support for the schools their kids attend.”

    Under the state's open-enrollment law, children may attend any public school, provided it has space. Children living in unincorporated areas with no schools of their own have traditionally been assigned to schools by neighboring districts.

    Those children often had to attend schools 20 miles from their homes because the districts tended to give priority to families living — and paying taxes — in the district. When Ms. Perkins went to enroll her daughter in kindergarten in Scottsdale and realized that her child would be bused miles from home, Ms. Perkins said she was told by a district administrator, “Let's face the facts, you are not paying your fair share.”

    The Legislature enacted a law in 2005 to remedy the matter, obligating unincorporated areas with more than 150 students either to be absorbed by an adjoining school district or to create their own.

    So when the question was put on the ballot here in November, voters narrowly favored creating a district instead of joining the closest existing district, Cave Creek Unified, where a majority of the Troon and Rio Verde children attend classes.

    The outcome essentially prevented a doubling of property taxes (to $1,190 from $590 on houses assessed at $500,000) — at least during the first year — and the secondary taxes assessed to build and maintain schools, since, well, there would not be any in Christopher Verde, as was made clear during the campaign.

    Homeowners in the new district will pay about $1.80 per $100 of valuation on their homes, compared with the $1.70 they paid to the county before the vote to create the district. Homeowners in the Cave Creek district pay a little more than $2.50 per $100 in base taxes, and just over $1 more per $100 in secondary taxes.

    Cave Creek schools have more than 250 children from the unincorporated areas of Troon and Rio Verde, a growing percentage of the district's population of roughly 6,000 children, said Kent Frison, an associate superintendent for the district.

    “From that perspective, the taxpayers of the school district, they feel it is inequitable,” Mr. Frison said.

    There will be some redress. Because Christopher Verde is now a formal school district, children there will be required to pay tuition when they attend schools in other districts. The Christopher Verde School Board will negotiate the tuition rates and try to have a voice in the administration of the nearby districts.

    Mr. Flynn has not applied for a seat on the new board. “I think I can do a better job on the outside just keeping my eyes on them,” he said.

    Ms. Perkins is also moving on. “It really ripped our community,” she said of the battle over creating the district.

    “We have to deal with the cards we are dealt,” Ms. Perkins said. “We have to make sure our children are taken care of, too.”"


    By my read, it would appear that the majority of registered voters in this particular suburb are retirees or do not have children, and thus were able to carry a majority vote that now transfers the vast majority of education costs directly to the parents of school age children in the form of (per student) tuition. Thus the retirees and childless couples avoided a major increase in property value based school taxes, whereas the parents are now paying 2-3 times as much in tuition payments as would have been the case if education costs were collected based on property taxes.

    The rich get richer, and the poor get poorer !

    .

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    Default Re: talk about 'gaming' the tax system

    My apologies in advance, as I'm not able to split the following into paragraphs right now, for whatever reasons: I guess this will always be a problem with any tax system, but especially one which has evolved into a "zero-sum game" between various groups. Here, you have retirees and the childless vs. those with school-age children. You also have several of the midwestern states vs. California as to the mandated use of "blended" gasoline. And you have legal immigrants/citizens vs. illegal aliens, which also involves schools. There are many other examples, but these three suffice as a subset. And one of the reasons I'd like to see the current tax system scrapped, is if the subsidies were ended for housing, etc., the corporations would no longer receive indirect corporate welfare to enable them to hire illegals. Speaking of a "living wage" the corporations would then have no choice but to pay one, as their employees (whether in the U.S. legally or illegally) would not be subsidized at the expense of taxpayers. There really isn't any such thing as Free Enterprise today - and there never can be as long as the current tax system is in place. I still would prefer to see a VAT of some type imposed, but only if it contains the safeguard that the current income tax is scrapped, and by law, will never be allowed to be imposed again.

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    Default Re: talk about 'gaming' the tax system

    I agree with you on the VAT ... because it would tax everyone who spends money, regardless of the source of that money, regardless of whether or not that money was 'legitimate' declared income, regardless of whether the person spending the money is a citizen / legal resident etc.

    However, the point of my post is the effect of 'democracy' when the majority of local voters aren't a 'typical cross section'. In this case you have a community where the minority of 'parents' have been forced to pay a huge amount of money to educate their children. In another case of a big southwestern city you have a minority of taxpayers being forced to pay a huge amount of tax money to fund social welfare benefits for the majority that don't pay taxes. Ultimately this will cause economic demographic shifts to get even stronger than they are already ...

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