How much does the Penny for Pasco cost you? Here's the math

A family earning Pasco's median household income of a little more than $44,000 has been paying roughly $108 for each of the past eight years toward the Penny for Pasco sales tax.

John Becker heard those figures and said that's a good deal.

"It's worth it," said Becker, a Publix store manager with a daughter in fifth grade and a son who just started at River Ridge High. "That's not even a dollar a day."

The question for voters on Nov. 6: Do you want to keep paying that $108 — or the comparable figure for your income — for another 10 years?

Becker's support makes sense. He is a member of two school advisory committees and knows how the Pasco school district would use its projected $226 million share.

Gary Willner's view might be a little more surprising. The Republican from Trinity vocally opposed the tax when it first passed in 2004, earmarked for road projects, construction and renovation of schools, buying environmental land and public safety equipment, among other things. He thought the breakdown of the proceeds was arbitrary and had a serious concern about the referendum being scheduled for that year's Democratic presidential primary.

Willner has been converted.

He attended a series of meetings to review how the proceeds were used. He still quibbles with the portion earmarked to purchase environmental land. But overall, he said, "There didn't seem to be any waste in there. If it wasn't well spent, I would be opposing it." As he visits Republican club meetings, he doesn't hear much organized opposition.

What about the impact to the average family?

"I haven't met anybody yet who said it kept them from buying anything," said Willner, who purchased a new car this year and wasn't dissuaded by the additional sales tax. "I haven't met anybody who even realized that extra penny was there."

Of course it's impossible to say exactly how much the Penny for Pasco costs each family. Some people are spenders, some are savers. Some frequently eat dinner at restaurants (taxable) while some only shop at the grocery store (mostly nontaxable). Some bought a big-ticket item like a fridge this year, boosting their sales tax bill.

But Frank Williams, an economist with the Legislature's Office of Economic and Demographic Research, has a "crude estimate" of Floridians' effective tax rate. Take your household income and multiply it by 1.46 percent. That's how much you pay in a year under the state's 6 percent sales tax. To see how much the Penny costs, divide that figure by six.

There are caveats, of course. Williams said the rate tends to be lower for seniors, who spend more of their income on nontaxable medicine or health care services. The rate is higher for families with kids, who spend more on things like school supplies and clothes. A larger household size leads to a higher rate.

Wealthier people pay a higher overall dollar amount, but tend to pay a lower rate because many can save more of their income. Critics note that sales taxes in general are regressive because poorer families pay a greater share of their earnings.

Accounting for all those variables, Williams said, the actual portion of a household's income going to sales tax can vary anywhere between 1 percent and a little more than 2 percent.

The IRS offers a second opinion in the form of a handy online sales tax calculator for those who itemize their deductions. The calculator is a little less precise because it computes a figure based on an income range. Williams said it's "probably a little conservative." After all, the calculator is used to compute a deduction that reduces your federal tax bill.

Still, it gives a good ballpark sense of your sales tax levy. Under the IRS calculator, a family of four earning between $40,000 and $50,000 can deduct $114 based on their estimated Penny taxes.

Regardless of the actual figure, the levy won't increase or decrease unless people change their spending patterns. The ballot amendment would extend the tax at the same rate through 2024.

"I can tell you that there will not be any change in the impact on any family compared to the last eight years," said Hutch Brock, co-chairman of a citizens committee supporting the renewal. "This is just continuing something that's already in place."

Brock called the Penny a fair tax because it is spreads the burden beyond just property owners. The pro-Penny campaign argues that at least 25 percent of the estimated $502 million in proceeds will be collected from tourists, snowbirds and renters.

County officials call that a "fair and conservative estimate" based on several statistics. The state's tourism agency estimates 23 percent of Florida's sales tax revenue is tied to tourism, and Pasco gets some slice of that. Also, 36 percent of the county's residential properties do not have a homestead exemption, indicating they are rented or owned by seasonal residents. Plus, there are shopping draws such as the Shops at Wiregrass that attract out-of-county spending.

Lee Logan can be reached at llogan@tampabay.com or (727) 869-6236.

Voters first approved the Penny for Pasco sales tax in 2004, and it is slated to expire after 10 years unless voters decide Nov. 6 to extend it. The renewal would begin in January 2015 and would generate an estimated $502 million over a decade. The Pasco School District and the county would each get 45 percent, and the remaining 10 percent would be divided among Pasco's six cities.

The Pasco Times calculated how much the tax costs families with different household incomes. The figures are rounded. Here's how we did the math:

1. Take your annual income and multiply it by 1.46 percent, or 0.0146. That's a rough estimate of the effective tax rate provided by Frank Williams, an economist with the Office of Economic and Demographic Research. (It's just an estimate. Seniors likely pay a lower rate. Families with children tend to pay a higher rate.) That shows how much you pay each year under the state's 6 percent sales tax.

2. Divide that figure by 6. That shows how much went to the Penny for Pasco sales tax.

The IRS also provides an online sales tax calculator: apps.irs.gov/app/stdc. It asks your income range, household size, Zip code and whether you made any big-ticket purchases such as a car or large appliance.

The following scenarios show what a family of four with various household incomes might pay each year in Penny for Pasco sales tax.

Scenario 1

Household income: $35,000

Williams estimate: $85

IRS estimate: $100

Scenario 2

Household income: $44,228 (Pasco's median income, according to the U.S. Census Bureau)

Williams estimate: $108

IRS estimate: $114

Scenario 3

Household income: $55,000

Williams estimate: $134

IRS estimate: $127

• Scenario 4

Household income: $65,000

Williams estimate: $158

IRS estimate: $139

How much does the Penny for Pasco cost you? Here's the math 09/29/12 [Last modified: Saturday, September 29, 2012 1:41pm]

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