Gwinnett residents weigh costs

Sales tax increase could result in locals paying about an extra $112 yearly for MARTA expansion.

Gwinnett County voters will decide March 19 whether they’ll pay an extra 1 percent sales tax to fund MARTA’s expansion into their county. But how much does that extra penny per dollar spent add up to for each person?

Instead of an annual bill, Gwinnett County residents and anyone else spending money in the county’s borders will pay for expanded transit services through nearly every purchase made in the county. Paying for transit needs with a T-SPLOST (transportation special purpose local option sales tax) model is one Fulton and DeKalb counties have also used to fund MARTA.

The tax is often referred to as a “penny tax” because it adds an extra penny per dollar to taxed purchases. But for consumers, the pennies can add up.

According to one Georgia State University economist, the annual cost to a county resident is about $112 per year. Peter Bluestone researched the annual cost of a T-SPLOST for metro Atlanta residents in 2012. While the overall average was $112 per person, lower-income people were found to have annual costs as low as $76. Those who made $70,000 per year or more had an average cost of $142 per year. Those with higher incomes tend to make more pur-

chases and thus pay more in income tax.

Because the study was conducted seven years ago, the true average may have risen with inflation and increases in income, Bluestone said. But because most consumers don’t track what they pay in sales tax, the increase may not be noticeable for most.

“Sales tax is not very salient, the reason being it’s taken out every time we go to the store,” Bluestone said. “One of the more salient taxes is property tax. People see a bill or statement of how much they owe every year, whether they pay it out of pocket or through their mortgage. People are very aware of how much they pay in property tax but not sales tax.”

County research in preparation for a transit expansion effort reflected this difference, spokesman Joe Sorenson said. Gwinnett County residents responded much more favorably to the option of a sales tax than that of a property tax in surveys.

But if the referendum passes, the tax is nearly unavoidable for almost anyone shopping in Gwinnett, whether they take advantage of future MARTA buses and trains or not, said Tom Smith, an associate professor of finance at Emory University.

“It’s not just one cent. These taxes are one cent on everything,” Smith said. “There’s nothing you can do about it; you can’t not buy goods and services.”

Sales tax is considered “regressive” by economists, meaning it has a more significant impact on low income people than those with high incomes. While an extra $112 might not register as much of a loss over the course of a year for some, those on the lower end of the income spectrum are more likely to notice the extra money they’re spending, Smith said.

“There’s a fairly sizable percentage of people for whom every dollar matters, whether you’re officially at or below the poverty line or earning $50,000 a year,” Smith said. “Someone earning $50,000 a year could still be very aware of their income and spending.”

Gwinnett residents won’t bear the full burden of the tax, as anyone who makes a purchase in the county is subject to county sales tax. Between 25 and 30 percent of Gwinnett’s sales tax revenue comes from nonresidents, according to a pro-transit advocacy group. Go Gwinnett spokeswoman Paige Havens said the number was not a new calculation, but one previously used in other SPLOST campaigns.

The nonresident contributions also helped make the sales tax more appealing to residents than property tax, Sorenson said.

“A property tax falls squarely on the property owners in a jurisdiction, while with sales tax, you get help with people from other jurisdictions,” Sorenson said.

Some Gwinnett residents, like Lilburn’s Wilma Simons, are fine with paying a little more to have wider access to public transportation. Simons commutes to Atlanta every day, and it’s common for her to spend 60 to 90 minutes in the car each way. She is planning on voting “yes” on the referendum.

“We definitely need to do anything we can to improve transportation in this area,” Simons said.

But for some who won’t utilize an expanded transportation system, an extra 1 percent tax could be irksome, Smith said. Smith does not live in Gwinnett County but commutes to Emory from outside the Perimeter by car.

“People who don’t use public transportation would say, ‘Why don’t you increase the cost of a train ticket or a bus ticket?’ Because then the people using it are taxed, and the people who aren’t aren’t taxed,” Smith said. “That’s a very common way of thinking about tax burden ... It’s important to understand that there are people who might want the burden to be put on those who actually use the good or service.”