City officials said today tnere were factual inaccuracies in a paid political advertisement published in The News on Feb. 9. A group called "Interested Citizens Opposed To A City Income Tax" presented general information and arguments against a proposed local income tax in an ad entitled "Income Tax Talk No. 1." Three more advertisements are planned. John R. Laird, a member of the group which placed the ad, had no comment on the city's charge that the ad was factually inaccurate. Rhea Kish, a member of the Citizens' Tax Committee which, according to the ad, "unanimously recommended that an income tax is not justified," told The News that statement was "absolutely untrue"and was taken "completely out of context. ' ' In actuality, Mrs. Kish said the committee members could not agree whether there would be a deficit in the city budget. "We ranged from people who thought there would be ne deficit to those who thought it would exceed $1 million. We simply could not agree. Those who believed that the deficit would be less than $V4 million recommended there be no income tax at this time. We did not unanimously recommend that an income tax was not justified," she said. An advisory referendum on the tax proposal will be held on Feb. 21 with the city primary elections. City officials' response to the Feb. 9 ad included: "Voters are not being asked to 'enact an income tax' on Feb. 21. The purpose of the non-binding referendum is to give citizens of Ann Arbor a chance to express themselves regarding a tax reform for financing City operations, which includes a reduction in property taxes if an income tax is adopted. "Secondly, funds generated by a 1 per cent resident and a one-half per cent nonresident income tax, with the required 7.5 mili reduction in property taxes, would not produce a net gain of only $360,000, as stated in the ad. Latest figures show an approximate net ïevenue gain of $990,000, according to Kenneth Sheehan, City Finance Director. The reported cost of collection estimated al $130,000 is correct. However, this is less than a 3 per cent administrative cost of the total $4.99 million raised by the income tax. This is below the average collection cost in other income tax citios in Michigan. 'Most importantly, the Citizens Tax Committee made NO unanimous recommendation that an income tax is not justiiïea nor any other unanimous recommendation. "Members were divided on a number of issues and therefore reached no consensus on the current tax reform proposal. "The conclusión drawn in the Feb. 9 advertisement that 'the answer lies in improved efficiency' for financing governnvent operations is unrealistic. The antcipated deficit is far too large to be made up by changes in operations. As stated in a Tax Committee report, the committee did conclude that they did not 'know of any areas of substantial mismauígement witliin City government.' "Members of the committee were evenly divided in their conclusions -regarding the proposal on the Feb. 21 ballot: "Those who believed that the 1 expenditure gap would be less than 1 half million recommended there be no change from the existing sources of rev-l enue. Those members who believed thatl the difference between revenues and expenditures would exceed $1 million recummended there be an income tax of 1 per cent and a reduction in the property' tax of about 6 milis. Sheehan estimates that an additional $918,700 to $1.2 million will be needed to balance the 1972-73 City Budget. "The committee report further explained: 'the resulting mix of income and property taxes is the only structure which assures that all major users of City services also pay taxes to help support these services. The short-term tax windfalls to corporations and owners of rental property are something which can be lived with as the price for a broader sraji fairer treatment of indivduals. This is eispecially so in that the windfalls will phavse out overl ya period of years and ultimately reduce the taxes borne by residents who rent and who purchase products locally."
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