Taxation Without Representation is Alive and Well

Our forefathers launched the Revolutionary War with the claim taxation without representation. What few of us realize is that taxing the other guy who has no say in the matter is now a prevalent technique of local and state governments. Here are some examples.

• Small business taxes. While the legal system treats corporations as legal entities, they have no voting rights. In addition, millions of small businesses are taxed on individual tax returns as flow-through entities, but the owners have no voting authority to represent their business if they do not live in the same community as their business. This means things like property taxes and sales taxes are set without representation.
• Out-of-state taxes despite no physical presence. Many states are taxing non-resident individuals and businesses with new legislation. For example, a consultant working for a California company may be subject to California income tax, even if residing and working in another state. Out-of-state businesses are also challenged with always-evolving nexus rules. As non-residents, these new taxpayers have no voice in the matter.
• High property taxes on vacation property. Own a cabin or other vacation property? The property tax you pay for this property is set by local officials. Temporary residents do not have a vote in electing these people, so out-of-town property owners end up footing the bill for local initiatives without a vote.
• Taxes to fund sports stadiums. New professional sports stadiums across the country are using various types of taxes to fund its construction, such as hotel and sales taxes. This tax is added to every visitors' bill without input on whether they agree to the tax or not.

What's the big deal?

Unfortunately, the pace of targeting taxes towards people and businesses with no voting rights is increasing. This is often due to legislatures taking the path of least resistance. Why not place the tax burden on someone who does not vote? Here are some suggestions on what you can do to manage this problem for you.

• Vote with your wallet. Know which cities have hotel and sales taxes to support construction projects, then vote with your wallet by selecting your location for business and vacation stays. Sometimes the tax only applies to select counties around a stadium. If you’re able to, select a nearby county that doesn’t collect the tax.
• Shop wisely. When looking for a new vacation home or cottage, pay attention to property taxes. There are cases where two similarly valued properties on the same lake have different property taxes because the lake is in two different communities.
• Speak up. While you have no vote, you can still try to apply influence. If a community is not business-friendly in with their tax proposals, for example, getting the word out is often your only option. Visit city council meetings and voice your concerns. Support local candidates that understand your plight. Consider challenging property valuations to minimize the impact of tax increases.
• Every state, county, and community is different. Know the tax climate before you buy, move, or work in a community that is not your primary residence. It’s often your only defense when you are subject to taxation without representation.
  
  
  

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