A recent Day editorial proposing property tax relief by linking it to an additional tax on high income individuals made some excellent points. The net for the citizenry would not be an increase in the total taxes, but rather a fairer distribution of the tax burden.

Property taxes are among the most oppressive, since they persist and increase despite personal financial hardships such as unemployment, retirement on fixed incomes, or illness and inadequate medical insurance. Property tax relief would be very popular. And while those with the highest 5% of incomes may complain about raising income taxes, most of them pay a far lower percentage of their incomes on taxes (including Social Security and Medicare withholding, sales, gas, fees, hotels, services, property, income, dividends, capital gains) than does the average citizen.

The current system just isn’t fair. The Day’s suggested plan is much fairer.

The biggest objection to The Day's proposal is that revenue on income taxes can vary a lot each year, while property taxes tend to be more stable.

When I ran as the Republican state Senate candidate in my district in 1996, I wrestled with how to balance property tax relief with a more progressive income tax that is subject to volatility. That volatility would make it hard for municipalities to guess what relief they could expect.

The solution to the volatility problem is for the state to calculate each year the incremental additional income from an increase in income tax on high incomes, and compare that amount each year to the total amount of property taxes generated statewide that year. Whatever that proportional value is statewide, that same proportion would be allocated to each municipality for property tax relief.

For instance, if the state raised, from its dedicated income tax increment, an equivalent of 20% of the total property tax burden statewide, it would allocate to each municipality a check equal to 20% of its mil rate income. The municipalities would then be required to reduce by 20% the tax due on each property tax bill.

So, if our mill rate in Salem is 30, and the increased revenue from top earners statewide equals 20% of the total of all property taxes raised in the state, then our town’s reimbursement under the state’s property tax relief grant would be the equivalent of 6 mills (20% of 30 mills). The property tax bills would be sent out in Salem with a note stating that — although the tax is 0.030 (mill rate) x (the assessed value of your property) to calculate each owner's property tax owed — the tax payment due is reduced by 20%, since the state has paid the rest.

If the mill rate is 10 mills (rich community), a 20% reduction in the tax due would be the equivalent of 2 mills, and if the mill rate is 60 (like some big cities), the relief would be the equivalent of 12 mills. If the economy improves and higher incomes soar, the state’s income tax returns will soar as well, and property tax relief percentage would be that much greater: all communities would share in the benefit by way of lower property taxes due. If the economy sours, that relief to each property taxpayer would be less, but mill rates would be determined just as they are today, and local budgets would not be changed except to work harder to reduce expenditures in lean years.

Communities would not be able to accurately predict in any given year how much relief property owners would get this way, and would go about their budgeting just the way they do now, but all citizens would be aware that they would get at least some property tax relief every year, based on the amount raised by the progressive tax increase on high income earners.

What degree of income tax would do the trick? It depends on the amount of property tax relief the public is willing to put on the shoulders of the rich. But it would not be as onerous as property taxes, in any case. (You only pay the increase if you are making lots of money.)

A 1% increase in incomes over $400,000 and a 2% increase in incomes over $1 million would not affect 95% of taxpayers, would provide much relief, and would not be sufficient to scare off people with high incomes who care about Connecticut’s quality of life and are fleeing New York City. The state’s rich would still be paying less as a percentage of income than most taxpayers in lower brackets. And the rich would enjoy lowered property taxes along with everyone else.

Bottom line: this is a step toward tax fairness, not a panacea. 

David B. Bingham lives in Salem.