On Saturday February 12, 2005, I attended a meeting of the South-Central Kansas Legislative Delegation. State Representative Judith Loganbill made remarks that included the fact that the maximum Kansas individual income tax rate becomes effective at taxable incomes of $30,000 for singles and $60,000 for married couples. A member of the audience spoke and expressed astonishment to learn this. I didn’t think about it at the time, but I now realize that Rep. Loganbill was advocating more tax brackets with higher rates.
Mr. Gary Brunk, executive director of Kansas Action for Children, wrote a letter published in The Wichita Eagle on February 23, 2005, opposing a taxpayer bill of rights, or TABOR, in Kansas. As evidence of TABOR’s failure in Colorado, he cites the low rate of childhood immunization in that state.
It is unfortunate that so many Colorado children don’t receive immunizations. Mr. Brunk, however, presents no evidence that Colorado’s TABOR is the cause. It is tempting to conclude that when both x and y are present that x must be the cause of y, but this is not evidence of actual causation. It is possible that other factors are responsible.
Besides, we might ask this question: Why should the taxpayers of Colorado pay to immunize others’ children? I think the answer many might give is that if the state supplies relatively inexpensive immunizations, the state can avoid paying the substantial healthcare costs for children who become ill with diseases the immunizations prevent.
This is undeniably true, and leads to the even-larger question: Why have states become responsible for providing healthcare (and other services) for so many? Mr. Brunk makes a case for what he terms a “fair” tax system. I submit that a tax system that takes money from one group of people and gives it to another group to whom it does not belong, no matter how noble the intent, is not in any sense fair. That is, if by fair Mr. Brunk means moral.
The economist Walter E. Williams makes the case succinctly: “Can a moral case be made for taking the rightful property of one American and giving it to another to whom it does not belong? I think not. That’s why socialism is evil. It uses evil means (coercion) to achieve what are seen as good ends (helping people). We might also note that an act that is inherently evil does not become moral simply because there’s a majority consensus.”
It is the runaway growth in taxes and spending — the taking of one person’s property and giving it to another — that a TABOR seeks to stem. A TABOR does not tell legislators how they must allocate state funds; it merely places a limit on how much they can spend. Legislators can still make judgments each year as to which programs are most important. Spending will most likely keep growing, but slower than it has.
The forces that want to increase taxes and spending by increasing amounts are always working and must be restrained. For example, Mr. Brunk, in his letter, advocates legislation that will require “a biannual report on the proportion of their income that people in different income levels pay in taxes.” Reading this, I get the strong impression that Mr. Brunk believes we do not pay enough tax. But for those who believe that state government is already large enough, a TABOR is the best way to manage its growth.
Here is an article from the Kansas Taxpayers Network that reports on school spending: http://www.kansastaxpayers.com/editorial_fedschool.html.
On Saturday February 12, 2005 I attended a meeting of the South Central Kansas Legislative Delegation. Lynn Rogers, USD 259 School Board President, and Connie Dietz, Vice-President of the same body, attended. There has been a proposal to spend an additional $415 million over the next three years on schools. Asked if this would be enough to meet their needs, the Wichita school board members replied, “No.”
As the annual tax season is upon us, we should take a moment to examine our level of awareness of the taxes we pay.
First, very many families don’t pay any federal income tax. According to a study by the Tax Foundation (link: http://www.taxfoundation.org/ff/zerotaxfilers.html) 58 million households, representing some 122 million people or 44 percent of the U.S. population, pay no federal income tax.
For those who do pay taxes, they often aren’t aware, on a continual basis, of just how much tax they pay. That’s because our taxes are conveniently withheld for us on our paychecks. Many people, I suspect, look at the bottom line — the amount they receive as a check or automatic bank deposit — and don’t really take notice of the taxes that were withheld. This makes paying taxes almost painless.
An alternative would be to eliminate the withholding of taxes from paychecks, and from monthly mortgage payments, too. Instead, each month or year the various taxing governments would send a bill to each taxpayer, and they would pay it just like the rest of their periodic bills. In this way, we would all be acutely aware of just how much tax we pay. I’m aware there is an obvious collection problem.
A further perversion is that many people are happy during tax season, because they get a refund. And they’re delighted to get that refund, so much so that many will pay high interest rates on a refund anticipation loan just to get the money a little earlier. The irony is that by adjusting their withholding, they could take possession of much of that money during the year as they earn it.
The other people happy during tax season are tax preparers. As a country we spend an enormous effort on tax recordkeeping and compliance. Another study by the Tax Foundation estimates that in 2002 we spent, as a nation, 5.8 billion hours and $194 billion complying with the federal tax code. (5.8 billion hours is equivalent to about 2,800,000 people working 40 hours per week, 52 weeks per year.) By simplifying our tax code, we could eliminate much of this effort, and return that effort to productive use.
Since tax withholding from paychecks and mortgages reduces our awareness of just how much tax we pay, it’s unlikely that governments will stop withholding and submit a bill to taxpayers. It’s left to ourselves to remain aware of how much we are paying.
The following is from the Kansas Taxpayers Network. It shows how government-funded organizations participated in the campaign to increase Sedgwick County taxes.
Taxpayers’ funds are being used to promote higher taxes in Kansas. Tax funds are also being used to lobby for higher taxes (see VI. and 1. above). This is an egregious mess that the legislature should stop. Tax funds are also used for “informational” campaigns by taxpayer funded groups. This includes a variety of local units like school boards but is not limited to any local units.
How bad is this problem? Public campaign donation and expense records show that $45,907.85 was contributed to the “Vote Yea” committee from organizations that are partially or fully funded by tax funds. Here’s how the money is broken down in this advisory election:
1) Greater Wichita Convention and Visitors Bureau contributed $10,000. The Greater Wichita Convention and Visitors Bureau is almost entirely funded by the City of Wichita through its hotel/motel bed tax. In 2004 budgeted expenditures were $1,122,510.
2) Greater Wichita Sport Commission contributed $25,000. The Sports Commission operates out of the Convention and Visitors Bureau offices. City, county, and state tax funds in the form of $5,000 a year memberships finance this office. The state funds pay for Wichita State University’s membership.
3) Wichita Downtown Development Corporation contributed $2,324. This city sponsored organization for helping downtown is primarily funded with a four mill city property tax within its downtown area boundaries.
4) Kansas Turnpike Authority contributed $3,583.85. This contribution by a state organization listed an “Inkind” contribution of a “loaned executive,” for the “vote yea” campaign.
5) The Hyatt Regency Wichita contributed $5,000. The Hyatt Regency operates this city owned and money losing hotel adjacent to the Wichita Century II complex. Since this corporation has a contract to operate this hotel this is another city related and funded contribution, albeit through this back door donation.
These five contributions were more than twice the entire amount of the vote no campaign that spent just over $21,000 in their unsuccessful effort to defeat this advisory proposal. This spending does not include $5,000 more in 5016 funds for the tax hike campaign. Similar charitable donations in tax elections have also been reported in northeast Kansas. All these tax and 5016 expenditures should cease. However, these contributions and expenditures were probably a good deal less than the money spent by tax funded organizations to lobby the legislature. Some of these local units register as lobbyists (see lobbyist list for cities, counties, schools, and other entities) and some do not, like lobbyists for Regents Institutions.
Tax funds are being misused to litigate for higher taxes. School districts that spend tax funds to sue the state over school finance are biting the hand that feeds them and already provides the bulk of their entire budgets. The state school finance formula should have an adjustment to penalize school districts that are suing the state over school finance. The perpetual school litigation machinery needs to be turned off at the statehouse.
January 25, 2005
Dear Senator or Representative:
I am writing to express my opposition to the legislature granting Sedgwick County the authority to raise its county-wide sales tax in order to fund the proposed downtown Wichita arena.
I realize that the voters in Sedgwick County voted for the tax. Still, I believe there is ample reason why you should vote against the tax.
The primary reason is that the idea of the arena came about so fast in the summer that there was little thought given to the underlying issues. The Center for Economic Development and Business Research at Wichita State University produced a study showing a large positive economic impact for a downtown arena. I found much academic research that showed otherwise, that taxpayer-funded facilities such as the proposed downtown Wichita arena rarely live up to their expectations, and instead become a burden on the taxpayers. I also uncovered the fact that the WSU study was flawed in that it omitted important factors such as depreciation, the accounting for which is now required by Government Accounting Standards Board Statement 34. Incredibly, the CEDBR at WSU was not aware of this requirement when they prepared the study that was used to promote the economic benefit of the proposed arena. They admitted this when I called it to their attention.
Thus, what is presented as an economic boon for all the people instead becomes the county as a whole subsidizing the interests of a few.
I presented my findings to many news outlets in Wichita, but there was little interest. Because I experienced such resistance to my message I started a website, the “Voice for Liberty in Wichita.” It is located at wichitaliberty.org. Much of the research I uncovered is posted there. As an example I am enclosing an article that I recently wrote. It is based on what was found to happen in Pulaski County, Arkansas (Little Rock), when they built an arena funded in part by taxpayers.
I would be happy to provide you with any additional information that I can.
Thanking you in advance for your time,
Taxes in Kansas are high, and may increase this year. The recent school finance ruling by the Kansas Supreme Court and the passage of the downtown arena sales tax referendum in Sedgwick County are just two reasons why.
We should act now to restrain the growth of state government spending. The Taxpayer Bill of Rights, or TABOR, has shown to be effective in Colorado. We in Kansas could have this, too.
The law is quite simple: state spending and debt could not grow faster than the rate of annual population growth plus inflation. It doesn’t prescribe how the state should raise or spend money, just that real (inflation-adjusted) spending can’t grow faster than the state’s population grows.
On the Americans for Prosperity web site there is an excellent analysis of what could happen in Kansas if we adopt such a law. You may read about it at this link: A Taxpayer’s Bill of Rights for Kansas.
Other helpful information is at the Cato Institute: Fiscal Trail Blazer: Colorado’s Taxpayer Bill of Rights is leading the way, Reforming TABOR in Colorado, and States Face Fiscal Crunch after 1990s Spending Surge.
As our state legislature prepares to start the 2005 session, I urge you to contact your representatives and make them aware of your support for this important law.
Collecting the sales tax to pay for the downtown Wichita arena may produce unintended consequences.
A paper titled “An Assessment of the Economic Impact of a Multipurpose Arena” by Ronald John Hy and R. Lawson Veasey, both of the University of Central Arkansas, (Public Administration & Management: An Interactive Journal 5, 2, 2000, pp. 86-98) looked at the effect of jobs and economic activity during the construction of the Alltel Arena in Pulaski County, Arkansas. This arena cost $50 million. It was funded in part by a one percent increase in the county sales tax for one year (1998). The sales tax generated $20 million.
In the net, considering both jobs lost and jobs gained due to sales tax and construction effects, workers in the wholesale and retail trades lost 60 jobs, and service workers lost 52 jobs. There was a net increase of 198 jobs in construction.
The fact that jobs were lost in retail should not be a surprise. When a sales tax makes nearly everything sold at retail more expensive, the supply curve shifts to the left, and less is demanded. It may be difficult to estimate the magnitude of the change in demand, but it is certain that it does change.
Workers in these sectors, should the sales tax increase take effect, may want to reconsider their career plans. How many retail and service workers can make the transition to construction work is unknown. It is certain, however, that when workers lose their jobs it imposes benefits costs on the government — and the taxpayers.
The population of Pulaski County in 2000 was 361,474, while Sedgwick County’s population at the same time was 452,869, so Sedgwick County is a somewhat larger. Our sales tax will last 2.5 times as long, and our proposed arena is about three times as expensive. How these factors will impact the number of jobs is unknown, but I feel that the number of jobs lost in Sedgwick County in retail and services will be larger that what Pulaski County experienced.
It is interesting to note that the authors of this study, while measuring a positive net economic impact for the Alltel Arena, make this conclusion:
“The primary reason for this positive economic impact is that the state of Arkansas contributed $20 million to the construction of the arena. As a result, the economic impact of building the arena in Pulaski County is greater than it would be if the county had funded the arena by itself. A vast majority of the jobs that will be created will be in the service sector that frequently offers lower wages than jobs in other sectors of the economy.”
The proposed downtown Wichita arena does not have the advantage of having 40% of its cost paid for by outsiders. It may be that we feel even more strongly the negative impacts of the sales tax.