7-a - Report on the Orange County Tax Equity Study

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CCM Economics, LLC Orange County Tax Equity Page 26 that consists of two retired persons will make slightly different spending choices than a 2-person household that is still working even if both of these households have identical income. The Census Bureau releases retail sales data for cities and counties via the economic census. An examination of this data shows that in 2012 there was $1.385 billion in retail sales for Orange County. Researching national and state level data on the performance of retail sales since 2012, allows one to project that retail sales in 2015 were $1.522 billion in Orange County. Even though 61% of the Orange County population is located in municipalities, approximately 92% of the retail sales occurs in the municipalities. This however does not mean that municipial residents are responsible for 92% of total retail sales and are thus paying 92% of the sales tax. Most retail businesses are located in municipalities—residents in the unincorporated parts of the county drive into the municipalities for their retail purchases and thus contribute to total retail sales and pay part of the sales tax. The Census Bureau municipal and county data on retail sales was combined with the IRS income data, disaggregated by income strata, to formulate a model of total retail spending for each of the 5 geographic subunits by income strata which was then reaggregated to estimate total retail spending for each geographic subunit. Once again, it was necessary to determine spending by income category since high income households do not spend their dollars on the same sets of goods and services that low income household do. Furthermore, high income households don’t purchase total goods and services in the same proportion as low-income households. If a household’s income doubles from $50,000 to $100,000, total retail sales will increase but they will not double in size. The remaining licenses, permits, and taxes are a relatively small portion of total revenue for Orange County government. These taxes include taxes on motor vehicles, gross receipts, 63