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Guest Column: Machesney voters should reject sales tax extension

March 7, 2012

By Michael Kleen

March 20, voters in the Village of Machesney Park will have the option of renewing a 1 percent sales tax that was levied in 2008 to pay for road repairs and construction. The imposition of this tax brought the combined state and local sales tax on most retail items in the village to 8.25 percent.

A misleading campaign by proponents of the tax is taking an “all-or-nothing” approach, claiming that roads will go unrepaired in the village if this sales tax is not approved. I believe Machesney Park voters should look past these arguments and reject the sales tax extension. Instead, the village should levy a small land-value tax, which would accomplish its goal of funding roads without all the negative side effects of a sales tax.

Citizens for Roads,” a private and largely union-funded committee in favor of the tax, in conjunction with village officials, has begun a campaign to “inform” voters about the benefits of the 1 percent road tax, which will expire in 2013. In their arguments, they imply that there are only two ways of funding road construction, a sales tax or a bond issuance. Bonds are an inferior revenue source, they say, because the village will have to pay interest on them. That is fair enough, but voters need to ask themselves why these are the only two options. Surely, there are other ways of paying for roads.

The Frequently Asked Questions document provided by the Machesney Park Village Board is not helpful in answering this question. It claims that if the 1 percent referendum does not pass, “with no additional revenue source, the village will be unable to continue repairing roads unless another alternate source of revenue is found.” Are we expected to believe that no roads were ever repaired in Machesney Park before the 2008 sales tax increase? Or that bond issuances were the only way road construction and repair was previously funded?

Additionally, proponents of the sales tax claim it has not negatively affected local businesses, citing an average yearly revenue growth of 2 percent. While it is true growth has not gone into the red as a result of the tax, a 2 percent growth rate in consumer spending is barely above stagnation. How do we know that consumer spending would not have increased much more had the sales tax not been imposed? It is impossible to say.

Rather than accuse sales tax proponents of attempting to sway voters to their side through omission, I am willing to grant that they are simply being unimaginative in failing to address these questions. Since they cannot imagine any other source of road funding, and since no one has stepped forward with an alternative proposal, please allow me to suggest a different course of action.

The Village of Machesney Park should allow its sales tax to expire and replace it with a small land value tax. A land value tax is different from a property tax because it only taxes the value of the land and not the improvements (buildings) on that land. This is a fair tax paid equally by all property owners that discourages land speculation and encourages economic development. It is much better for the local economy than a sales tax, and it is easier for families and individuals to plan for in their budgets. Furthermore, it makes sense for public roads to be funded by a consistent resource like land, rather than by consumer spending, which is subject to the unpredictability of the marketplace.

Voters, do not let yourselves be convinced that a sales tax is the only reasonable way to pay for public improvements. I urge you to consider all the options, and when you do, I am confident you will reject this measure to extend the local sales tax. Instead, consider the alternative of a simple, flat tax on land value. You will find this to be a more fair and equitable way to fund your public projects, one that does not punish consumer spending in an already challenging business climate.

Michael Kleen is a local author, proprietor of Black Oak Media, and candidate for the Winnebago County Board in District 8.

From the March 7-13, 2012, issue

2 Comments

  1. John

    March 8, 2012 at 12:01 pm

    Talk about lack of imagination, Mr. Kleen should take a look in the mirror sometime. His proposal fails to take into account the road use by people who don’t live in Machesney Park, but merely pass through. While a sales tax may, or may not pull them into the revenue pool, a property tax will definitely not include them.

  2. Jared

    March 8, 2012 at 12:18 pm

    In my opinion, your letter is short on supporting arguments. Why is the land value tax better than the property tax? In what way does it discourage land speculation and encourage economic development? I do not see how it is any easier for to plan for in a budget. I see that it is different in a budget, in that a family/individual can not cut back on that cost if the need arises. That seems worse.

    On the one hand, I considered that a land value tax is the appropriate source of revenue for building roads, as each parcel of land needs a road to get to it. I remember the counter-proposal of “if outsiders want to use our roads, make them pay their share through sales taxes”. But I don’t think I can buy that argument, as the land owners would be the ones that WANT the outsiders to come to their property. But then this still seems more of a Property Tax fit than a Land Tax fit (as the higher property values such as commercial properties would be the lands that want most to attract outsiders).

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