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May 13, 1997


Tax Who, Tax What, Tax How?

The National Association of Realtors gave Mike Dow good news this morning. Housing values in the Mobile-metro area (which includes Baldwin County) have shot up by 13.3% in the past year, raising the median value of houses in Mobile to $89,400. The Mayor called the report "amazing" and "fantastic." "It's good to be in the good news," the Mayor said. I suppose the Mayor means it's good news for sellers, that is, for property owners, but what about local buyers and those who would like to buy? It's not anything they can get excited about. Apparently Mobile is riding on the coat-tails of the development boom in Baldwin county, but housing booms are a mixed blessing. Not too long ago the sewers were backing up in Daphne and sewage was floating on the main highway in Orange Beach. Hey, the snowbirds flocking here have heard about the low property taxes and they have the money to buy those $90,000-plus houses. Even the faint whiff of raw sewage won't keep them from sniffing out a good deal. But, given that they're mostly empty-nesters with sensitive noses for privileges for seniors, they don't give a damn if school systems are any good or not.

The perennial problem sticking in Mobile's craw is how to fix a school system badly in need of repair. It won't be solved by promoting tourism or by providing ideal cost-of-living conditions for senior citizens fleeing northern climes. It will be solved by a united front of all parties agreeing to a rational solution. As matters have stood in the past and stand now, Mobile has two hostile parties arguing about what to do -- the sales-tax devotees and the property tax partisans. The current spokespersons for the former are: Paul Sousa, the Mobile School System Superintendent; John Holland and Charles Jordan, both school board members; and Freeman Jockisch, a County Commissioner. They believe a one-cent sales tax should be imposed, without the consent of voters, to raise $35 million to pay for a $300 million building program. The current leaders for the latter are: the editorial staff of the Mobile Register; Sam Jones, President of the County Commission; Gary Tanner, County Commissioner; Hazel Fournier and David Thomas, both school board members; and some members of the business sector. They believe a referendum should be held to give voters a chance to decide if they want a sales tax or a property tax, or any kind of tax.

In our view, the most rational and the fairest choice would be a referendum in which the electorate supports a modest increase in the property tax. The City of Mobile is currently afflicted with a 9% sales tax (10% if you include the restaurant sales tax) and the unincorporated areas of the County with a 5% sales tax. The sales tax conceals the true tax burden of all citizens, ripping off the poorest members of the community on the one hand and rewarding on the other hand the wealthiest members of the community with unreasonably low property taxes. The Mobile Register is right in placing the blame on the "demogogic rhetoric of Alfa," large landowners, and "most politicians." (April 28, 1997). Perhaps it's time to pin "Scarlet Letters" not just on DUIs but on particular malefactors in the community who benefit selfishly from the sales-tax rip off.

To illustrate the unfairness of the sales-tax scam, we offer as a thought-experiment the following situation. The median income in Mobile is roughly $32,000 a year. Very conservatively we estimate that a family of four living on that median income would spend about $500 per month on food which means at a 9% sales tax that their annual tax on food is $540.00. If you add to the monthly cost of medicine -- let's says $30.00 taxed at 9% times 12 -- their total annual tax is $572.40. Now assuming their house is worth $60,000, their annual property tax, with homestead allowance, is $263.00, give or take a few dollars. If a referendum supporting a property tax were to double this family's property tax, they would still come out better, and we have only considered the two most egregious items taxed by a sales tax. We don't recommend a doubling of property tax, but we do recommend removing the tax burden from those who can least afford it and placing it justly on those who can.

The USA Polling Group recently conducted a poll which showed a substantial majority of voters would not object to either a one-cent sales tax or a property tax, though the 69% favored the former and 57% the latter. The poll also showed that a substantial majority of voters believe the County Commission should not have the authority to increase either the sales tax or the property tax without a referendum. But most importantly the poll showed that 80% of voters believe that Mobile County needs to make major expenditures for new schools. The indications seems to be that voters are ready at last to form a united front to do something serious about adequately funding the school system.

However, these polling figures may reflect only the good will of an electorate not yet inundated by flood of propaganda from the big land owners and the land-rich corporations seeking to protect their preferential tax privileges.

-- Tom Brennan

Life Forms by Dan Silver

The Harbinger, Mobile, AL