Economists believe blending taxes like Saginaw has - is the right thing to do

Property taxes are levied locally, but permitted and regulated by state laws. As experts review tax laws, the debate about how to levy taxes fairly has been contentious and ongoing. Saginaw's blend of both property and income taxes is regarded as the "best" way to levy the cost of government. Here are coments reported in a national publication.

"The question of how state governments should balance taxes ---and structure their tax cuts---is a tricky one."

"Many economists do not like property taxes because they hit every home owner at the same level, regardless of his or her ability to pay. A retired couple on social security or a single mother who just lost her job pay the same as a couple across the street who both have good jobs. Raising revenue, through income taxes, many argue, would be fairer."

(Editors note: since 1973 Michigan has employed a circuit breaker law that ties property tax burdens to household income. Thus, everyone has to pay taxes if they own property, but the amount they must pay is tied to how much income the taxpayer has. This law is commonly known in Michigan as a "HOMESTEAD EXEMPTION." Michigan law also permits a special "poverty exemption" so those in dire straits will not be forced out of their homes in extreme circumstances.)

On the other hand, income taxes are not terribly stable. In a recession, the amount of money they bring in plummets, while property tax revenue stays steady. And property taxes allow individual communities to set their own spending priorities. Given the trade offs, economic experts generally argue that the best tax structure combines a bit of each."

Property Taxes: The Coming Crusade and the local government crunch, Malcolm Gladwell, the Washington Post National Weekly Edition, Page 13, March 13-19, 1995