Who’s likely to pay more of their income under Wichita’s proposed 1% sales tax?

A proposed 1% sales tax in Wichita will likely lead to higher cost burdens for lower-income families, a Wichita Eagle analysis found.

Economists, and opponents of the sales tax, also have warned of the regressive nature of sales taxes and their impacts on families during the campaign.

“If you have a low income, you have to have food, clothing, shelter, right?” economist Donna Ginther said. “And then there isn’t anything left over. A higher income family has more ability to buy a wider variety of goods, or not, because their needs are met through having that higher income.”

Sales taxes have widely been regarded among economists as regressive because they disproportionally affect lower-income households.

An Eagle analysis using adjusted Internal Revenue Service data was able to confirm that, assuming the sales taxes in Wichita is raised to 8.5%. The state of Kansas already levies a 6.5% sales tax at the register, with the county adding on 1%.

A family of four that brings home $25,000 a year is expected to spend at least $1,053 a year on sales tax at 8.5% — or about 4.2% of their income.

Increasing that household income by $50,000 brings total sales tax spending to $1,400 or 2.8% of that family’s income.

For a household income of $100,000, sales tax expenses are likely to be $1,792 a year, or 1.7% of their income.

Passage of the sales tax would shift some of the tax burden from property taxes to sales tax, since some of the money would go to property tax relief.

“Taxes are needed to fund the activities of government,” Ginther said. “If you’re switching who pays the tax, it creates unintended consequences and has distributional effects.”

City officials have said if the sales tax passes, the mill levy for property taxes will be lowered by four mills – or about $46 in savings for every $100,000 in appraised value on a residential home.

But it’s likely that many families may not see savings, given what they could spend on the new sales tax.

A family of four with a household income of $50,000 would see an estimated increase in spending of $173 a year, according to adjusted Internal Revenue Service data.

Wichita’s sales tax rebate programs

The city of Wichita has proposed at least two different rebate programs to help offset additional costs that families may incur if the sales tax is passed.

The first would give $55 a year to families who qualify for the Low Income Energy Assistance Program (LIEAP).

The City Council also approved a property tax rebate program that would give additional relief to homeowners who already qualify for the state’s Homestead Property Tax Relief program.

But Ginther said those programs, especially the $55 a year rebate, are just a “drop in the bucket.”

“Every little bit helps, but that’s a small amount,” she said.

Details on how to apply for those programs through the city are still in the works.

Early voting is currently underway for the March 3 sales tax election.