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

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CCM Economics, LLC Orange County Tax Equity Page 41 ‘counting’ county and local taxes collected today as a burden or cost to its citizens. In the same way, today’s expenditures are ‘counted’ as a benefit to its citizens. Therefore, if a municipality saves some of its revenues today for future spending by shifting it into a reserve fund, it would appear that today’s revenues, i.e. costs, are larger than the expenditures, i.e. benefits. In essence, one should think of today’s tax revenues that are being collected and shifted to reserve funds as being placed into a ‘savings account’ even though the net benefit today is ‘negative’. It is a similar analogy to a household that brings in $100,000 in income, spends $90,000, and saves $10,000 for future spending. The household has incurred the time and effort costs of earning $100,000 in income but appears to only be getting $90,000 in benefits from consumption and spending. 78