Eyebrows across Kansas City crinkled early this year when advocates for improvements in the urban core talked about raising the sales tax to pay for an undefined list of rebuilding projects.
Some wanted to know where the money would go. Others had a more basic question: Should you help the inner-city poor with another tax thathurts
the inner-city poor?
It’s well-known, after all, that Kansas City’s taxes are already regressive. Several studies show lower earners here generally pay a larger chunk of their income in state and local taxes than wealthier earners. And since everyone pays roughly the same amount for essentials such as food, a higher tax bite has a disproportionate impact on the poor.
The city’s 1 percent earnings tax is one culprit — flat taxes, by definition, are regressive. But an equally important reason is the heavy reliance on regressive sales taxes to pay for stadiums, public safety, transportation, the fight against drugs, even the zoo.
Those taxes add up in a hurry, especially since Missouri collects some sales taxes on food. Take a look at your grocery bill: A Kansas City family spending just $100 a week on groceries pays roughly $250 in sales taxes each year on just those purchases.
That’s $250 it can’t spend to feed the family.
Some supporters of the proposed 1/8-cent urban-core sales tax admit they’re troubled by the issue. In a perfect world they’d prefer a property tax hike for the improvements, sort of like the property tax levy that pays for health care for the poor. Property taxes are considered more progressive than sales taxes.
But poll after poll, they point out, shows Kansas Citians — even poor Kansas Citians —prefer
the penny-at-a-time sales tax.
Mayor Sly James’ tax overhaul commission, now working on its report, knows this and is unlikely to recommend major changes to make local taxes fairer, its members say. It’s complicated and would need approval from a skeptical Republican state legislature.
Still, remember this — with higher water rates and energy taxes possible, Kansas City’s urban poor are likely to face more budget-balancing pressure than ever. Over time, higher sales taxes will pinch.
Don’t let Kansas off the hook, by the way. The sales tax in Kansas City, Kan., is even higher than in Kansas City, Mo., and Kansas also taxes food sales.
Topeka has tried to lessen that impact with a food sales tax rebate for those earning less than $35,400. Except Gov. Sam Brownback wants to end that rebate — while permanently extending the higher state sales tax passed a few years ago.
We’re going to spend this year arguing over government spending and taxes. As the discussion moves ahead, though, we may want to talk abouthow we collect our money, as well as how much.