Notes
[1] “The price elasticity of
demand for a good [or service] is the elasticity of quantity consumed per
capita with respect to the price of the good.” Microeconomics, Fifth
Edition, B. Curtis Eaton, Diane F. Eaton, Douglas W. Allen, Prentice Hall,
2002, p. 103. Elasticity may be impacted by several factors, not the least of
which is the “necessity” quality of the good or service provided and the
availability of alternative sources for it. In the case of taxes, consumers
have the alternative of moving from the jurisdiction imposing the tax, or
changing the value upon which the tax is assessed. In the case of the real
estate tax, a choice may be made by moving to a home assessed at a lower value,
an alternative that frequently is uneconomic due to transactional costs. For
solid waste charges, most residents are required to have their household refuse
collected by the Township, thereby limiting alternative sources for the service
and leaving volume reductions (expressed by electing a smaller number of
containers) as the only legal alternative. The only choices available in the
case of the earned income tax is a change of residence and/or employment. The
number of jurisdictions in the region which do not impose an earned income tax
is relatively small, and the economics of relocation would be equally
discouraging as is the case with the real estate tax.
[2]
Pennsylvania Department of
Community and Economic Development, data as to earned income taxation, by
county and local government unit, , July 11, 2002, http://ctcoas01.state.pa.us/dced/MSS.DYN_EITOPT_TAX_RATE_2002.show.
[3] U.S. Department Of Labor, Bureau of Labor Statistics , Washington, D.C, Consumer Price Index for Urban Wage Earners (CPI- W), Phila.- Wilmington- Atlantic City, PA- DE- NJ- MD, CMSA), annual percentage change; Bureau of Labor Statistics, US Dept. of Labor, July 26, 2002.
[4]
Consolidated Annual Financial
Report, Year Ended December 31, 2001, Township of Lower Merion, Montgomery
County, Pennsylvania (the “2001 CAFR”), p.54.
[5]
The Public Utility Realty
Tax Act (“PURTA”) was enacted by the Pennsylvania General Assembly to apportion
utility-related real property taxes across the Commonwealth, thereby moderating
the prospect of windfall tax revenues for jurisdictions with utility properties
within their boundaries. PURTA distributions have declined in recent years
for reasons apart from local property values, and their inclusion in this
analysis would skew the results on a year-to-year basis.
[6]
Pennsylvania’s Local Property
Taxes: Distribution and Economic Effects, Robert Strauss, Greater Philadelphia
Regional Review, Summer 2001.
[7]
Ibid.; See also, State and Local Tax Burdens
in the Philadelphia Region - The 2001 Report, Gary W. Ritter, Candice Hufford, and David Thornburgh,
Greater Philadelphia
Regional Review, Summer 2001; and Tax Policies and Residential Mobility,
Mark Hoven Stohs, Paul Childs and Simon Stevenson, International Real Estate
Review,. 2001, Vol.4, No. 1.
[8]
It is relevant that the Township
also changed its notification process for its solid waste fees for the 2000
billing year. That may have had the effect of consumers “recognizing” the
rate increase later than might otherwise have been the case, and modifying
behavior accordingly, thereby delaying the perceived impact of the change
in fee and structure.
[9] See, The Cost of Reducing Municipal Solid Waste, Karen Palmer, Hilary Sigman, and Margaret Walls, Discussion Paper 96-35, September 1996, Resources for the Future; An Excise Tax on Municipal Solid Waste?, Don Fullerton, Department of Economics, University of Texas at Austin, June 1993; Variable Rates for Municipal Solid Waste: Implementation Experience, Economics, and Legislation, Lisa A. Skumatz, Ph.D., The Reason Foundation; March 1996; Unit Pricing Programs for Residential Municipal Solid Waste: An Assessment of the Literature, Marie Lynn Miranda, Scott D. Bauer, and Joseph E. Aldy, School of the Environment, Duke University, Report prepared for the Office of Policy, Planning and Evaluation, United States Environmental Protection Agency, 1996.
[10] Although this would likely not be the case in circumstances where of extremely high or extremely low adjustments, neither of which are currently under consideration by the Township, it is assumed that the fall-off in demand will not differ appreciably due to variations in the percentage increase assessed.
[11]
While the discussion describes
this aspect of the choice decision as “convenience,” the scope of decisional
points is much larger and more diverse, which contributes to analytical problems. In this case, those considerations
can include such factors as (but not limited to) topography (e.g.,
are the containers located on a different elevation than the curbside collection
point?), age, health, and family size. The economic aspect of the analysis
is less comprehensive, in that no judgment was made as to the amount of elasticity
introduced into the equation as a result of any price differential in the
form of various “menus” of fee options.
[12]
Pennsylvania Department of
Community and Economic Development, Taxation Manual, Seventh Edition,
Harrisburg, May 1999, http://www.inventpa.com/docs/taxation.txt,
Jul 26, 2002 (the “DCED Tax Manual”).
[13] DCED Tax Manual.
[14]
53
P.S. 6913 and DCED Tax Manual.
[15]
1990 Labor Force Location
Information, P048 Place of Work Minor Civil Division Level Universe Workers
16 Years and Over, Data Set: 1990 Summary Tape File 3 (STF 3), Sample
data, US Bureau of the Census.
[16]
Pennsylvania Economy League
- Eastern Division; provided in May,
2002.
[17]
Regional Data Bulletin
– Population and Employment Forecasts, 2000-2025, 9-County DVRPC Region,
Delaware Valley Regional Planning Commission, March, 2002 (the “DVRPC Forecast”).
[18]
DVRPC Forecast.
[19]
Bureau of Labor Statistics,
as per note 3., supra.
[20]
June 2001-June 2002 data from
Bureau of Labor Statistics, as per note 3., supra; Forecasts from Federal
Reserve Bank of Philadelphia, August 5, 2002. The “CPI-U” index relates to
“all urban consumers” in the Philadelphia area, whereas the “CPI-W” index
focuses on wage earners. Notwithstanding the differences which appear from
time to time, the aggregate change in the indices is within .4 percent since
the 1982-84 benchmark period upon which the indices are based.
[21]
An effort also was made to
determine the impact of solid waste fees. Each local government takes a different
approach to solid waste management, whether in terms of fees and charges or
the degree to which the municipality’s general fund absorbs a portion of labor,
transportation and disposal costs, thereby making a direct comparison difficult
and susceptible to misinterpretation For example, residential refuse disposal
costs in Delaware County are paid at the county level, not by municipalities
as is the case with respect to many municipalities in Montgomery County. The
data and comparisons were omitted for that reason.