Taxing Circumstances
 The late breaking campaign issue this year is the concept of eliminating Kansas City's 1% Earnings Tax in favor of a land tax.In a study funded by the Show-Me Institute, University of Missouri economics professor Joe Haslag contends that the land tax is a fixed-quantity item. The land is always there, someone will always own it and therefore a stable tax revenue would exist instead of the highly volatile earnings tax which fluctuates with employment numbers and salaries. Opposition to this idea comes from those who say that a land tax will have a disparate impact on low or fixed income land owners. The argument is also made that commuters who live outside of Kansas City but work within city limits get a free pass. This may sound like another one of my crazy ideas, but bear with me. Why not do both? This is just a rough sketch and I'm seeing a few loopholes as I write this, but it's the first draft. I know it needs some work. First, continue to collect the 1% Earnings Tax like we always have. That keeps a steady stream of revenue coming into City coffers on which we hopefully draw interest while we hold it. Second, initiate a land tax similar to what the Show-Me Institute is recommending. Now, here's where my idea gets really crazy. At tax time, Kansas City residents will file their city returns and receive a refund of most if not all of their 1% witholdings. Non-residents would still pay as they always have. As for the land tax, a formula would need to be created that takes into account a person's income, length of ownership and other factors to determine the rate at which they are taxed on their land. That way, low and fixed-income residents would not be taxed out of their homes. I have not read the Show-Me Institute's study. Maybe they already made these suggestions and I'm just reinventing the wheel. If so, I apologize and will make note of that on this blog. BUT, if they haven't thought of this idea I hope to get it into the public debate. I'm writing a position paper on this and I'm sure I'll get all kinds of emails telling me what a horrible idea it is, but that's the price you pay. If they're talking bad about my ideas at least they're talking about them! |
posted by Mark at 9:07 AM
Comments on "Taxing Circumstances"
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brent said ... (10:12 AM) :
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Keith Sader said ... (12:57 PM) :
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Mark said ... (2:04 PM) :
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Anonymous said ... (3:46 PM) :
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Brent said ... (3:59 PM) :
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Michelled said ... (4:48 PM) :
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joeinkc said ... (12:04 PM) :
post a commentAt first glance, I like it...I like the idea of still collecting the 1% from out-of-towners...but not from KCMO folks. The problem would be on how to issue that credit back (ie is it more costly to implement than it's really worth.
The one think that I like about the land tax is that it could add more pressure to absentee land-owners. it would give them incentive to do something with the land (as opposed to leaving it empty). Right now, there is actually a reward for them to either keep the land vacant or let the building deteriorate because the value stays low (vs punishing people for fixing up their property and increasing its taxable value).
I haven't gotten through the show me intitute's study either -- but I look forward to reading your more concise position paper :)
I have to ask, why increase the real day-to-day taxes on most of the population.
As someone who works and lives in KC I'll see land tax come due when? Around Dec? Thanks for that, but I'll get my refund in Feb or so? Wow, the govt. gets to dip into my pocket throughout the year, I get to pay them one lump sum in Dec and I may get that back half of my total tax bill in 2-4 months.
Exactly how is this a good idea again, because I'm missing the part where giving the city 2x as much money to get half of it back is in my personal interest.
Keith,
I told you it was just an idea! I literally was thinking it up as I wrote it. You're right about the timing thing. Definitely something I didn't consider.
Are you opposed to the entire concept, or just my back of the napkin scribblings? What if the two month (or more) lag was taken out of the equation? What if someone like yourself saw almost no net change in their taxation rate? What if, what if, what if. I know it sounds shaky, but this in my opinion is how good policy is made. OPEN debate of the issues.
I like the theory. If you could alleviate the timing issue that Keith Sader brings up you may be on to something.
Does a vacant lot get taxed as much as say the parcel of land under One Kansas City Place? What about condos? Who pays the tax for the land under the Kirkwood?
My understanding is that the land tax is based on the parcel of land. So the land under One Kansas City Place gets taxed exactly the same as a vacant lot the same size sitting right next door. The idea is that it doesn't penalize a developer for buildng a successful building on a property (which raises the taxable value under the current property tax setup). This, in theory, would encourage owners to develop vacant lots and rehab rundown homes because it would increase the value of the property, but the tax would be the same. Right now, there is incentive for an absentee owner to leave a lot empty to keep taxes low.
How about not taxing land owning KCMO folks in the first place? I work in KS and they know that I live in KCMO - yep there it is on my paycheck: Kansas City Bend Me Over Tax. I'm sure they could figure out how to classify property owners.
I think we should raise the city tax to 2% for people that live in Johnson County. We can use the extra to supplement light rail. ;-)
Please not BOTH! The last thing I need is to complicate my taxes more (live in KC work i KS). When I moved here in 98 my new employer did not take out city taxes and no one told me I had to pay them. Three years later I get a tax bill from the city, telling me to pay taxes back to like 1994. I had to go through a mountain of paperwork to prove that I only moved to the city in 1998.
I don't mind paying my taxes, but hate having to keep track of: income, real property and personal property taxes. Back in Texas I had no income or personal property tax. Just one BIG tax on my house. One bill to pay no problems.