The City of Alcoa has a ballot initiative proposing a .5% increase in the local sales tax to pay for a new $30 million high school. The alternative, they say, is a 40 cent property tax increase.

In trying to navigate the complex and confusing maze of state laws regarding distribution of sales tax revenues between the city, county, school systems, etc., v. the impact of a property tax increase, it's impossible for me to figure out which is better policy.

There's also a lack of transparency in the local paper's reporting, which advocates for the sales tax. The numbers and explanations they throw out either a) don't add up, or b) don't make any sense. The city has not been forthcoming on how they came up with 40 cents as the needed property tax, or what assurances we have that the .5% sales tax would be used for schools v. other projects such as the Alcoa Highway Bypass or corporate welfare incentives/infrastructure for the West Plant development tenants.

What I can figure out, though, is that the owner of a median-price house in Alcoa ($116,600) would pay $119 more per year in property taxes. That same household would have to spend $23,810 at Alcoa retail merchants to generate $119 in additional sales tax revenue, which is unlikely because the median household income is only $42,799.

The IRS sales tax deduction tables suggest an Alcoa taxpayer in that income range pays $1179 in sales tax, which would be about $12,745 spent on taxable retail purchases. A .5% increase would only bring an extra $58.

Consider a higher income taxpayer, though. Alcoa city taxes on a $400,000 home are currently $1960. With a 40 cent increase, it would be $2360, an increase of $400. That same household would have to be spending $80,000 at taxable retail to generate the same $400, which is highly unlikely. (Which is probably why we see so many signs in the upscale neighborhoods advocating for the sales tax.)

The IRS sales tax deduction calculator for a taxpayer making $150,000 allows $2076 at 9.25%, which would be about $22,443 in taxable retail spending. A .5% increase would only generate about $112 in additional sales tax revenue.

The City of Alcoa says a sales tax is the better way to go, because people from other jurisdictions spending money in Alcoa would help fund the school. Except for car dealers, I'm not sure where they would spend that money. The major shopping center is in Maryville. There's a Wal-Mart in Alcoa, but it took a big hit when a new mega Wal-Mart opened in Maryville.

So until the city is more forthcoming about exactly what new revenues are needed, financing for the school, debt service, detailed comparison of sales tax v. property tax, assurances re. how new revenues will be spent, etc., I'm inclined to vote against any new tax. My instinct, though, is that a property tax, (and possibly a special school district property tax?) would be more proportional and the more appropriate way to fund a new high school.