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Tax & Fiscal Policy

Kansas City's Taxes Aren't "Relatively Low"

By Patrick Ishmael Filed March 7, 2016 Source Show-Me Institute

Last week our friend Dave Helling at the Kansas City Star wrote about the upcoming earnings tax fight, and on many points we actually agree. The city does waste money on all sorts of tax incentives and city-backed projects. The city does "fail miserably on the fairness index — relying far too much on flat sales and income tax rates that hurt the poor." And as Helling observes, other cities that don't have an earnings tax obviously have their own fire and police departments, so to argue that public safety will suffer without this regressive tax is awfully deceptive, to say the least.

But where Dave and I part ways is on his statement that "Kansas City's tax burden is relatively low." Sure, folks can look at local taxes in different ways and come to differing judgments. But I have a hard time believing most people would look at how, and how much, Kansas City takes from its residents and say that KC's tax burden isn't so bad.

For my part, I would judge Kansas City's tax burdens like I judge the state's—based on its income, sales, and property taxes. Most cities don't have an earnings tax at all, meaning that relative to Kansas City's peers its earnings tax is way above average. Kansas City's sales taxes are prodigious, too, with rates that exceed 10% in many communities. Our sales taxes are so high that last year we had the 15th highest sales tax rates of America's 50 largest cities. That isn't relatively low, either; relatively, that's high. And while property taxes are often difficult to compare, the Brookings Institution found in 2013 that Jackson, Platte, Clay, and Cass Counties all were well above average when it came to property taxes paid and property taxes paid relative to home value.

Kansas City's taxes aren't low at all; in fact, they're quite high.

Dave's political judgment may be right, of course: Kansas City's earnings tax may well be renewed because residents like the idea of other people paying for the city's services. But while the earnings tax shares its misery across jurisdictional lines, misery shared is not misery solved. Rather than try to export our high tax problems, we should be trying to reduce them. Only then can we ever really become a "relatively low tax city."

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