Orange County NC Website
Browse       Search
44 <br /> <br /> <br />David Mitchell made the following PowerPoint presentation: <br /> <br />Orange County Tax Equity Study <br />BOCC Meeting <br />January 23, 2018 <br />Hillsborough, NC <br /> <br />Outline of Presentation <br />• Information about myself and my firm <br />• Understanding the issue of tax equity <br />• Area of Study—Orange County <br />• Approach to analyzing the issue of tax equity <br />• Results <br />• Questions <br /> <br />CCM Economics, LLC <br />• David M. Mitchell, President <br />• Ph.D. in Economics in 2001 <br />• Economic analysis, forecasts, economic impact studies for 17 years <br />• Recent Past Clients: National Park Service; US Census Bureau; State of South <br />Carolina; State of Missouri; Estero, Fl; Gainesville, Fl, Cheraw, SC; University of SC; <br /> <br />Understanding Tax Equity <br />• Benefits Principle—pay taxes commensurate with the benefits received <br />• Ability-to-pay principle—higher income household can afford to pay more in taxes, so <br />they should <br />• Consider two households, Poor and Rich, with incomes of $25,000 and $150,000 <br />• Local government provides one good, local education, which costs $7,000 per student <br />per year <br />• Benefits principle—both households pay $7,000 in taxes. Poor household pays 28% of <br />their income and rich household pays 4.6% of their income. Is this fair? Both paying <br />and receiving the same dollar value of output, but paying different percentages for it. <br />• Ability to pay principle—poor household pays 5% of their income ($1,250) and rich <br />household pays 10.2% of their income ($12,750). Is this fair? Poor household is <br />receiving an extra $5,750 of value that they didn’t pay for ($7,000-$1,250) and rich <br />household is losing $5,750 that they paid for but didn’t get ($12,750-$7,000) <br />• Consider the US Income Tax <br />• Top 1% of all income earners earned 20.6% of AGI but paid 39.5% of federal income <br />taxes <br />• Bottom 50% of all income earners earned 11.3% of AGI but paid 2.8% of federal income <br />taxes <br />• The only way to have completely equitable taxes is for every household to earn an <br />identical income and every household to have identical preferences for the consumption <br />of government services <br /> <br />Area of Study – Orange County- map <br /> <br />Area of Study – Orange County- graph <br />(percent population change 1987-2015)