Residential property tax in Baltimore is an anachronism. It’s a primary reason why Baltimore’s becoming The Incredible Shrinking City. It should be done away with, and replaced with a progressively graduated income tax, and supplemented with a progressive commuter tax. How would this work, and what would be the advantages?
If the income earner of a highly-assessed home suddenly finds his/her income dropping (as is happening more and more often), the high property tax could amount to the coup de graceas to living in Baltimore. If, on the other hand, Baltimore were to raise roughly the same amount of revenue through a progressive income tax, the unfortunate person would gain a municipal tax reduction, just as s/he currently would on state and federal taxes.
It is contrary to public policy to punish a homesteader who improves a home by increasing the property tax. On the other hand, the slumlord who lets his property go to hell is rewarded with a lower property tax!
When wealthier folks “gentrify” a neighborhood, property values of the entire neighborhood rise, punishing the original lower-income inhabitants with higher property taxes. To cope, some families double up; the elderly cut back on basic food, heat, and health needs; and others move to cheaper lodgings or even have to live on the streets.
Residential property tax is very expensive to operate, literally costing millions of dollars a year. Property has to be reassessed every three years, and assessors don’t come cheap. Record-keeping is an expensive year-round business, with a lengthy appeal process (utilized primarily by the better-educated). On the other hand, a municipal progressive income tax could be piggy-backed on to the federal income tax. This would cost very little to administer.
If taxpayers are suspected of cheating, we wouldn’t have to pay for local law enforcement efforts, because if they’re cheating on their municipal income tax, they would ipso factobe cheating on their federal income tax. We could just blow the whistle to the Feds!
A progressive income tax could tap into some of the income of those Baltimoreans who don’t choose to spend their wealth on their homes.
And what about a progressive commuter tax? Most of the income earned in Baltimore City is earned by people who work here, but don’t live here. The City doesn’t get a penny of their earnings, though they use our infrastructure, benefit from our institutions, and pollute the air with their vehicles. The only argument I’ve heard against the idea of a commuter tax is that the counties would retaliate if it were instituted. My reply to that is, “So what?” Here are six reasons why the “retaliation” argument is bunk.
There are more non-City people working in Baltimore than vice versa.
On average, non-City commuters are wealthier than City residents who commute to the suburbs.
Out-of-City workers are scattered over several counties and even surrounding states; the tax bite would not be that concentrated in any single jurisdiction.
Any county could compensate its residents who pay a City tax by lowering their own residential taxes for those folks.
Given the logistics of poverty and need in the City, it would be petty and mean-spirited for a county to “punish” the City. I don’t think most countians are like that.
On the off-chance that I am wrong in this assessment, the City could compensate any resident to the extent he or she is taxed by the county of employment. We’d still be way ahead of the game.
The kicker, of course, is that Annapolis would have to approve a Baltimore City commuter tax. And, to put it mildly, the rest of Maryland is not so inclined.On the other hand, if the City were serious and united in its determination to tax non-resident wage earners, we could make the State an offer it can’t refuse. The people of Baltimore could pass a resolution stipulating that if the General Assembly does not develop a serious attitude change and allow the City its commuter tax, then the City would disincorporate. Small towns and villages disincorporate all the time. When they do, the county or State simply moves in and assumes police, education, and welfare responsibilities. If the City disincorporates, the State would be faced with three alternatives:
The State would either have to declare martial law in the City and deputize police, teachers, and municipal workers, all at great expense;
The State could incorporate the City into Baltimore and Anne Arundel Counties, meaning City public servants would enjoy increased wages and City students would have access to better schools, plus the tax base would be shared with higher-income taxpayers;
orthe State could let the City have its commuter tax--obviously the lesser evil.
Any way, Baltimore would win. The only question is, do we have the imagination, guts and organization skills to make it happen?