Throwing The Baby Out With The Bathwater

In this case, the baby is the Impact Tax. In our headlong rush to cut taxes and starve government we are overlooking the fact that some taxes have merit.

In this case the Impact Tax is being politicized and demonized and made the “bad tax” by the use of erroneous statements, voodoo math and misleading diatribes for no other reason but that it is politically expedient. People are emotional about it and this lends itself nicely to political rhetoric. Political expedience, not good sense is driving some agendas.

I have read that we “will no longer build Schools”, “Cecil County does not have it”, “it is unfair”, “home building is being stopped”, “it does not generate enough revenue to matter”, and the like.

What the Impact Tax does is tax the “New People” moving into our community, not the ones already here. This is based on the assumption that new people into a community UNFAIRLY burden the existing tax payers by needing additional new schools. What the Impact Tax does is place part of the cost of this new building on the new people who need it, not the ones already living there who have paid for their existing schools.

What the Impact Tax does for existing Tax Payers: It pays for the construction of new schools. BRAC is, if you believe the reports, bringing 20,000 new jobs into the County. Let’s discount that to 5,000 additional children. These will require the construction of 2 to 3 new schools, each with a price tag of 80 to 90 million dollars. Without the Impact tax, the entire cost of these new schools will fall on the existing tax payers and I do not think it is fair. With the Impact Tax $43,000,000 falls on the new households. Without the Impact Tax, that $43,000,000 would fall on the shoulders of the existing tax payers. Now, what is so fair about that??

CECIL County utilizes an Excise Tax to help cover its new construction.

This tax hits all tax payers, new and existing alike. They wish they had an Impact Tax and are working to get one.

What is worse, The EXCISE TAX is not tax deductable on your Federal Tax Return while the Impact Tax, as part of the cost of a home is.

As for the Builders, they are out of sorts because they are forced to pay the Impact Tax before they start building. This ties up scarce funds, for as long as 18 months. In a cash tight market not very desirable.

We can readily solve this issue by moving the payment of the Impact Tax back to when the home is sold. That will get the builders off the hook by freeing up their funds so they can get back to building again. Every builder I interviewed said as much.

So, now what are we left with…….the Impact Tax is ALSO being used to pay down the Forward Funding Bonds that were sold when our existing schools were built. You can cut off the revenue stream that the Impact Tax creates, but the Bonds must still be paid for. Also there are some of in our leadership (DG said so in an Aegis article) who desire to raise the TRANSFER TAX (which affects existing taxpayers and new tax payers alike) to make up for the shortfall of no Impact Tax...What is the wisdom to that???

So then what happens when the Impact Tax is repealed?? The County is forced to raise taxes on the existing tax payers so the Bond obligations can be paid. So now where are you?? That is correct, you end up paying more taxes on top of what you are already paying. Does not sound too smart does it????

So why does an avid and active member of the Tea Party Movement support KEEPING the Impact Tax.

Because the Impact Tax reduces the tax burden on existing Tax Payers and those tax payers are the constituency of the Tea Party Movement.

Tony Passaro

Bel Air Tea Party Movement