A Multiobjective Linear Programming Methodology for Public Sector Tax Planning.

The article describes an interactive multiobjective linear programming (MOLP) methodology to provide the city manager of Peoria, Illinois with insights necessary to restructure the city's tax system. The need to respond to the protests of citizens over ever increasing tax bills must be balanced against the need to maintain the levels of public services that they expect. Historically, tax planners have relied on property taxes as the major source of city revenues. An equitable tax structure minimizes the sacrifice of individual taxpayers and balances their tax burdens with their perceptions of the value of additional public goods. Recently, some cities have began experimenting with the sales tax as an alternative to the property tax. In the early 1980s, however, Peoria's industrial base began to erode as several major plants closed, product demand declined, and Caterpillar Tractor Co., the major employer in the area, suffered an extended strike. MOLP provides efficient rather than optimal solutions to problems involving multiple objectives. The city manager indicated several objectives that he wanted to achieve through tax restructuring, including the reduction of property taxes.