Earlier in the week, I reported that Georgia is considering implementing a tax on personal services, meaning that professions like barber shops, law firms and accountants would impose a tax on their services, which would likely be passed through to the consumer. This tax would replace property taxes in Georgia.
Now, normally, my Fix the Tax Code Friday is strictly federal tax. But this issue has been on my mind all week, so I’m making this my first state and local tax Fix the Tax Code Friday question…
Would you be willing to pay a sales tax on personal services in exchange for the elimination of property taxes?
This is a trick question for me. Property taxes are very low in Philadelphia and they’re deductible for purposes of itemizing on a federal return.
Taxation on personal services will drive the price of a lot of things up. But more of a concern is that small business owners constitute a majority of business in this country. The imposition of such a tax could hurt business – and it would certainly add to the administrative costs of the business (the extra work of charging tax and collecting it). So, my biased opinion is no.
Sure, but only because I own a house, so I pay property taxes, but I don’t pay for that many services. So for me, it would likely be a taxcut, actually even better, a reallocation of the tax burden from me to someone else. That’s my kind of tax relief!
But in general, no, keep services sales tax free.
Property taxes are paid by most every one, either on land, personal property, vehicles, etc. Porfessional services are not used by everyone, and those with lower incomes and retirees, would be hit with flexible taxes that would impact their meager lifestyle. I am all for everyone paying a fair share. Society can determine those for collective reasons should be exempt or be given relief from some taxes. But for our levels of government to function, at whatever level of service those receiving services desire, taxes must be paid.
My biggest pain with the current tax system, is how corporations avoid taxes and try to find new creative ways to avoid taxes, when this system of government provide a stable economic climate, a stable government (of sorts), and a defense of the country and law enforcement to foster a civil society. That allows those same corporations to do business that creates wealth for a select few, while offering employment and economic activity for the locales they operate. Everyone benefits from our American system, everyone should pay a fair portion to keep it.
The argument most often given against the property tax system is that it’s not consistent or fair – even from state to state.
I pay less than many of my suburban counterparts for property tax even though I theoretically benefit in that Philadelphia receives a big chunk from the state in school funding. Of course, this is changing and I think it deserves its own post…
Some tax on property actually makes sense. Everyone has a right to property, but there obviously isn’t enough land for everyone to own a piece. So those who inhabit property pay “rent” to the public in the form of property taxes.