Karl Peterjohn: Swap sales tax for county property tax
06/08/2014 6:30 AM
06/08/2014 6:30 AM
This community, as well as our country, is still in an economic crisis. Our community needs a boost, or a comparative growth advantage. Creating a 1-cent city sales tax in Wichita won’t create economic growth.
In fact, raising taxes would put our community on the same path trailblazed by many other communities across our country. That is the path to fiscal perdition: Detroit.
This community can create a special and unique comparative advantage by eliminating one of the major disadvantages that this state, Wichita and Sedgwick County all face: high property taxes.
The high property tax problem for Wichita was identified in the 50-State Property Tax Comparison Study issued in March by the Lincoln Institute of Land Policy and the Minnesota Center for Fiscal Excellence. This study identified the fact that Wichita’s property tax on commercial property was 38 percent more than the national average.
High taxes mean less economic growth. This is particularly true for property taxes.
The unique and special approach this community needs is to focus on eliminating the county’s property tax, not on raising the sales tax to expand city spending.
Currently, the county imposes a 29.3 mill property tax countywide. This mill levy could be eliminated with about a 1.5-cent increase in the sales tax on a revenue-neutral basis.
This type of property tax competitiveness would be beneficial on several levels. First, it would provide a unique selling proposition to help attract business to this county and Wichita.
Eliminating the county property tax also would provide benefits to all property taxpayers and not just a select few getting special subsidies contained within the city’s sales tax hike plan. Eliminating the county’s property taxes would reduce most county taxpayers’ property tax bills by about 25 percent.
Instead of dangling subsidies, which everyone else in the economic development game is doing, let’s try a unique incentive: Sedgwick County just eliminated its property tax. We should try this because it can work.
In 1995, Kansas eliminated its state unemployment tax because the fund had developed a large cash balance. This five-year tax moratorium created a unique economic advantage for Kansas business. Within a couple of years, the Kansas economy enjoyed a substantial surge in economic growth. Kansas became a leader, enjoying some of the fastest economic growth between 1997 and 1999. Eventually, the unemployment fund’s cash balance shrank. By 1999, the unemployment tax was restored. This unique tax advantage was eliminated.
As a county commissioner I am focused on creating a special advantage for everyone in Sedgwick County. Eliminating the county’s property tax is an idea whose time has come.