It’s Not A Celebration When You Engage In Poor Tax Policy
Kansas City leaders held a news conference to claim credit for cutting taxes, which is great except that they didn’t actually cut taxes. Yes, they eliminated some taxes, but the total tax effect was more than offset by increases in other taxes.
Here’s the kicker, though. What voters eliminated, strongly urged on by city officials who proposed it, were good taxes. What is a good tax? It is a tax that raises necessary money, is easy to collect and enforce, and does this without affecting normal economic behavior (“sin” taxes are an obvious exception to the last part.) Economists of all stripes are nearly unanimous that taxes based on land values are the premier way to fund government (especially local governments). So, what did Kansas City do as the only city in Missouri authorized to impose a land tax?
They got rid of it.
Here is the silliest part of the press conference statement:
[…] said elimination of the three small property taxes also makes the city treasurer’s tax collections easier and more efficient to administer because the city doesn’t have to calculate the small levies and each owner’s boulevard front footage.
But calculating the “small levy” is no more complicated than adding a column onto a spreadsheet. Nothing more. And the front footage totals were calculated years ago and rarely change. (Although this post is more about lamenting the loss of the land tax than the frontage tax.)
Missouri requires a reassessment system every two years for a number of tax purposes. Doing a land tax as part of that is, in fact, extremely simple.
For complicated reasons I don’t need to explain here (and don’t even fully know because we have never been able to find the court file that upheld the land tax decades ago), Kansas City is unlikely to be able to reimpose the land tax now. That is unfortunate. Raising the land tax instead of adding a new sales tax would have been the better move for long-term growth in Kansas City.