Essays

We Need the Best Schools Taxes Can Buy

This essay appeared in the September 23, 2005 edition of the Portland Tribune

Author: Samuel Metz

Date: 08/19/2005

In the words of the renowned 20th century Western philosopher, W. C. Fields, "It is time to take the bull by the tail and face the situation." 

Our schools deserve more money and we should give it to them. 

This is a hard sell. 

Many will ask, "Why should I pay to educate your children?" The flippant answer is that my uneducated children will steal your car and increase your insurance rates; consume precious police and judicial time when they get caught; live on your tax dollars when they are convicted and sent to prison; and never pay a penny in taxes because they never earn an honest dime. 

A more serious answer is that original dollars invested in education repay taxpayers many times over (anywhere from three to eight times according to the Economic Policy Institute, www.epinet.org). How does education pay for itself? 

1. When educated students hit the work force, they generate more taxes than their education cost as their improved careers generate greater tax revenue. 

2. Our communities are safer because better educated students commit fewer crimes, break into fewer houses, avoid being unwed parents, and resist drug abuse. 

3. Future taxes decrease because better educated students spend less time in prisons and jails. The predicted investment return would be the envy of any venture capitalist: each dollar invested in public education produces a 10 to 20 fold return in money not spent on judicial and incarceration costs, currently 15% of our state budget. 

4. Businesses seek communities with excellent schools. Why? Better schools attract talented workers. How do we know this? Did you know anyone who paid a premium buying a house in a better school district? 

Ultimately, better schools reduce taxes and improve everyone’s quality of life.

But today, right now, where will this tax money come from? 

A sales tax. Many taxpayers may reach for smelling salts, but we have finally met the right justification for a tax Oregonians have avoided for a century. 

Why a sales tax? 

Property taxes are fixed by state constitutional amendments; it would require (literally) an act of congress to change them. And who thinks our property taxes aren’t high enough?

Oregon already depends more on its state income tax than any other state does on any other single tax. Not a good source of money for our schools. 

A sales tax is the least onerous answer. Citizens for Oregon’s Future, with data from the Legislative Revenue Office, estimate that a limited sales tax exempting services, shelter, food, health care, medicines, and utilities would generate $1.1 billion every two years per 1% tax (www.fororegon.org). A 2% sales tax would increase our public school revenue by 50% over its current budget, an amazing sum that could make excellent schools a reality in every district in Oregon.

But we taxpayers are a suspicious lot. How do we prevent every interest group in the state from diving into the new-found revenue? How can we be sure the schools will use this windfall wisely? And how can we prevent this sales tax from ballooning even higher? 

Good questions. Consider this: 

1. We enact a 2% restricted sales tax exempting shelter, food, health care, medicines, and utilities with revenue dedicated exclusively to K-12 public education. 

2. We freeze this tax for ten years, long enough to document benefit from this investment. If we don’t see a detectable improvement in our state in ten years, the tax automatically ends.

3. To insure transparency and accountability, no school district could enjoy any of this largesse without a public proposal describing exactly how their money might be spent. 

4. And to protect our current school funding, freeze the current school budget in the general revenue tax pool ($5.24 billion) for the next ten years. Perhaps add an automatic 2% cost of living rider. 

Here are the downsides. Retailers are burdened by additional accounting needed to collect and submit taxes. The cost of discretionary spending goes up two cents for every dollar spent, which would still be less than half of any neighboring state (www.salestaxinstitute.com). Interest groups look hungrily at the extra $2 billion and plot how to get their fingers into it. 

Here is what we achieve: The quality of public education soars. The best teachers in the country compete to work in Oregon. Students learn more, learn faster, and stay interested longer. Literacy rises. More literate high school graduates seek jobs with high potential, or plan for higher education. Welfare use drops. Recreational drug use declines. Teenage pregnancies go down. Prisons slowly empty as fewer criminals enter. New businesses look favorably on Oregon for relocation sites. And all of us enjoy safer streets. 

A 2% sales tax, frozen for ten years, dedicated to making the next generation of Oregon citizens the best educated citizens in the country. That investment will richly reward all of us. Let’s do it.