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Economy / Taxes

A Land Tax Is Preferable to the Earnings Tax

By Christine Harbin on Jan 11, 2010

Thomas McClanahan of the Kansas City Star explains in an editorial that Kansas City would benefit if it repealed the earnings tax and instituted a land tax.

So many of the taxes we pay are levies on productive effort, which tend to discourage activities and endeavors we should welcome. We want an economy that rewards wealth creation, development, hiring and trade, but we tax incomes, structural improvements, payrolls and sales. […]

The key point: A land tax would encourage investment. Property owners would be penalized for hoarding acreage and doing nothing. For example, speculators who own parking lots downtown — where land taxes would be highest — would have to develop their parcels or sell them to entrepreneurs capable of putting up profitable buildings and realizing the full economic potential of the location.

He cites a 2006 study by Prof. Joseph Haslag, executive vice president of the Show-Me Institute, How an Earnings Tax Harms Cities Like Saint Louis and Kansas City. This study demonstrated that the earnings tax reduces personal income.

The Show-Me Institute has produced several other pieces of scholarly work demonstrating that the earnings tax is too burdensome for Missouri cities.

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Christine Harbin

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