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Editorial: Battling Complexity; Vt. School Tax Remains a Challenge

When British astrophysicist Arthur Eddington was referred to as one of only three people in the world who grasped Albert Einstein’s then-new theory of relativity, Eddington supposedly asked, who’s the third one?

We recall that anecdote whenever we contemplate Vermont’s education-funding formula. Certainly more than three Vermonters understand it, but we’d be surprised if the number who can explain how the amount they pay in school taxes is calculated exceeds three figures. And while most people feel entirely comfortable going to their graves without mastering the relationship between time and space, not so with school taxes. Once a year, Vermont residents are supposed to pass judgment on the budgets proposed by their school boards, a decision influenced in part by what sort of burden the proposal would place on their family budgets. That can be tough when the relationship between the local school budget and the household education tax is anything but straightforward.

That’s why we were pleased to read that a recent discussion among lawmakers about the statewide property tax — yes, state tax officials are predicting it will have to increase significantly this year — included not only a suggestion that it is time for the state to consider revising its formula but also to come up with one that is comprehensible to mere mortals.

“The system now is too confusing,” said Rep. Jim Condon, D-Colchester, during a meeting of the House Ways and Means Committee last week to discuss state revenues. “When the average voter goes to the polls to decide their school budget, there’s a disconnect between what they’re voting on and how that’s going to affect their tax bill — what they’ll actually have to pay for the statewide education fund.”

His comment was in response to a suggestion by Tax Commissioner Mary Peterson that it may be time for Vermont to rethink how it raises money for schools. Act 60, the education-funding law that makes everyone’s head hurt, is about 15 years old now, Peterson said, meaning that it has lasted longer than the average education-finance law.

One reason why Act 60 is so complicated, of course, is that it’s a hybrid system: It’s a property tax that attempts to factor in people’s ability to pay. And when one takes into account just how much the education-finance system aims to achieve, it’s little wonder that Vermont ended up with a convoluted mess. Besides raising enough money to help pay for schools, account for people’s varying abilities to pay and respect the long-established right of local review of the school budget, the system is required by the state constitution to deliver equal educational opportunity. It should be no more difficult for taxpayers in hardscrabble Town A to provide their children the same educational offerings as residents in swanky Town B. Its complexity is not ornamental: As a funding mechanism, it has been overwhelmingly successful.

But when the time rolls around to vote on the school budget, and townspeople must account for, among other things, the homestead rate, income sensitivity, the common level of appraisal and the relative balance of the local and statewide rates, it’s all but impossible to ascertain the relationship between local spending and individual tax burdens.

It needs to be acknowledged that simplicity is important, but it’s not everything. Some of the easiest-to-understand taxes are also the least fair — the flat-rate income tax, for example, would take but a moment to calculate, but would also hammer those with fewer resources to pay the bill. But a tax system that defies comprehension is one that is ill-suited to New England governance, which calls upon people to annually decide how much they wish to tax themselves. Striking the right balance between simplicity and fairness should be achievable.