No taxation without representation
In 1764, James Otis, a firebrand attorney from Massachusetts, drafted a pamphlet, “Rights of the British Colonies Asserted and Proved,” to condemn a newly proposed Stamp Act presented to Parliament in Britain. The legislation would tax American colonial legal documents and newspapers, even pairs of dice, in order to refill the British treasury, emptied after long years of war with France in North America. Otis claimed such taxes violated the rights of colonists as British subjects because they lacked seats in Parliament.
In his writings, Otis laid out the American founding principle of no taxation without representation: The very act of taxing, exercised over those who are not represented, appears to me to be depriving them of one of their most essential rights, as freemen; and if continued seems to be in effect an entire disenfranchisement of every civil right.
We could use a little bit of this Revolutionary Era outrage when it comes to Tax Incremental Finance (TIF), a 20th century municipal tax invention that has become increasingly important in the country Otis and the other Founding Fathers would come to create.
In TIF, cities and villages snatch property taxes from new development to pay off loans for sewer, water, roads and other infrastructure needed for the projects. Technical colleges, K-12 schools and counties lose out. They are deprived of taxes, but they don’t complain because they are able to increase taxes to make up this lost revenue.
What you get, then, is a system of indirect taxation. Cities and villages keep taxes from TIF projects. The other taxing jurisdictions raise their taxes accordingly. Indirectly, then, cities and villages tax people outside their borders to subsidize development within their borders.
In this week’s issue, The Record-Review calculates what this indirect TIF taxation costs residents, including rural township residents. The owner of an average-priced home in our local area pays between $113 and $189 a year for TIF, depending on the school district. The worst part of this “development tax” is that it isn’t listed on anybody’s property tax bill.
All of this would make an American colonist’s blood boil. We shouldn’t be happy about it either.
To remedy the problem, we suggest the state legislature make a change to the Joint Review Board, the five-member local panel that oversees Wisconsin’s Tax Increment Districts (TIDs). It needs to replace the city or village appointed citizen member with a township resident. A town resident could speak forcefully about the public purpose of any proposed TID and its financial prospects.
Supporters of the TIF status quo might argue that county, tech school and K-12 school representatives already represent township residents and there is no reason to change the system. Let’s recall, however, this is the same argument leaders of Parliament used when faced with colonists opposed to the Stamp Act. They claimed members of the House of Lords provided the colonists with “virtual” representation.
The American colonists didn’t buy that argument then, nor should we buy it now. If cities and villages want to indirectly use township taxes to pay for their growth and development, a township resident should get to vote on that.
The American colonists wound up fighting a revolutionary war and starting a new country over a tax dispute. We aren’t so radical. We are only calling for a change in TIF law. But we insist the state make this modest change.