This is the Wichita Downtown Development Corporation. It routinely advocates for special deals whereby downtown developers don’t have to pay property taxes or sales taxes. Or if they do pay property taxes, they might be routed back to them for their exclusive benefit. But as you can see, WDDC campaigns for low-income households to pay more sales tax on groceries.
Say, did you know that WDDC is funded almost entirely with tax money? And that it wants to spend that money in secret?
This is the Wichita Metro Chamber of Commerce. It routinely advocates for special deals whereby businesses don’t have to pay taxes. Sometimes it arranges cash grants and tax credits for companies. But as you can see by the Yes Wichita sign in the window, the Wichita Chamber campaigns for low-income households to pay more sales tax on groceries.
This image misleads voters in two ways, one which is significant.
First, Wichita doesn’t have wooden water pipes, as shown in this advertisement.
Plus, the pipe that is the subject of the city’s water plan is 60 years old, but there is no indication that it needs replacement.
Here’s a snippet from a recent “Yes Wichita” advertisement and mailer. This group campaigns in favor of the one cent per dollar Wichita sales tax that is on the November ballot.
Following is the entire quote from the Wichita Eagle story. I’ve used bold type for the parts that the advertisement used. Everything else was discarded. Do you think it is misleading to leave out the part about how a significant portion of the rate increase will happen regardless of the sales tax vote?
“Without the sales tax, water rates would have to increase 32 percent over the next four years to pay for expansion at the city’s Aquifer Storage and Recovery (ASR) facility northwest of Wichita. That would set the rates high enough so the city could start making bond payments in 2018, Public Works and Utilities Director Alan King said.
That increase would be on top of projected water rate increases totaling nearly 20 percent over the next four years to meet regular maintenance needs of the existing infrastructure.
So the total rate increase for the water base charge would be nearly 52 percent by 2018.”
Why is the City of Wichita spending taxpayer money mailing to voters who don’t live in the city and can’t vote on the issue?
A resident of Bel Aire thought it was curious that she received an informational mailing regarding an issue she can’t vote on. The issue is the proposed one cent per dollar Wichita city sales tax that is on the November ballot.
So why did the City of Wichita spend tax dollars informing residents of Bel Aire about an issue on which they may not vote?
Many Wichitans question whether the city should have spent tax dollars on this mailer. Especially when it’s pretty clear that the material is designed to encourage citizens to vote in favor of the tax.
(If you doubt whether the city’s educational material is advocating for passage of the sales tax, consider this: The “Yes Wichita” group campaigns for passage of the tax. This group refers voters to the city’s website to learn about the issue. “Yes Wichita” would not do that if the city’s material contained anything that might discourage a “Yes” vote.)
I’ve been involved in political campaigns. I’ve always been quite careful to send mail only to those voters who live in the relevant jurisdiction. That is, I don’t waste donors’ money mailing to people who are not able to vote for my candidate.
The return address on this envelope indicates the mail came from the Office of the Mayor. So may I ask, Mayor Carl Brewer, why are you wasting taxpayer money sending mail to people who can’t vote on this issue?
Here’s a large sign that urges Wichita voters to approve a higher sales tax. This sign is located on the property of a restaurant that’s part of a chain. Its president actively campaigns for the higher sales tax. Say, did you know that restaurants do not pay sales tax on the food they purchase? But low-income Wichitans pay sales tax on their groceries, and at a rate that is nearly the highest in the nation. (Only 14 states have sales tax for groceries, and Kansas has the second-highest rate.)
Does this seem fair and just, that the president of a restaurant chain would campaign for higher sales tax on groceries? On top of this, almost two-thirds of the sales tax revenue would fund a project that protects wealthy neighborhoods from lawn irrigation restrictions during an extended drought. For this, low-income households are asked to pay higher sales taxes on their food.
This is Union Station in downtown Wichita. Its owner has secured a deal whereby future property taxes will be diverted to him rather than funding the costs of government like fixing streets, running the buses, and paying schoolteachers. This project may also receive a sales tax exemption. But as you can see, the owner wants low-income households in Wichita to pay more sales tax on their groceries.
Analysis of household expenditure data shows that a proposed sales tax in Wichita affects low income families in greatest proportion, confirming the regressive nature of sales taxes.
One of the criticisms of a sales tax is that it is regressive. That is, it affects low-income families in greatest proportion. This is an important consideration to explore, because in November Wichita voters will decide whether to create a new city sales tax of one cent per dollar. If enacted, the sales tax in Wichita would rise from 7.15 percent to 8.15 percent.
It’s an important issue because to hear some people talk, it seems as though they are saying the proposed tax is “one penny.” Anyone can afford that, they say. But the tax is an extra penny on each dollar spent, meaning that the cost of, say, fifty dollars of food at the grocery store increases by fifty cents, not one penny.
Further, we hear the sales tax spoken of as being a one percent increase. That’s true, if we mean a one percent increase in the cost of most things we buy. And one percent, after all, is just one percent. Not a big deal, people say. But considering the sales tax we pay, a relevant calculation is this: (8.15 – 7.15) / 7.15 = 14 percent. Which is to say, the amount of sales tax we pay will rise by 14 percent.
To explore the effect of the proposed sales tax on families of different incomes, I gathered data from the U.S. Census Bureau, specifically table 1101, which is “Quintiles of income before taxes: Annual expenditure means, shares, standard errors, and coefficient of variation, Consumer Expenditure Survey, 2012, (Selected Values).” This table divides families into five quintiles. It gives annual expenditures for each quintile in various categories. For each category, I judged whether it is subject to sales tax. For example, for housing, I indicated it is not subject to sales tax. This is not totally accurate, as some of the spending in this category may be for taxable items like maintenance and repair supplies. Food is subject to sales tax in Kansas, although low-income families may apply for a rebate of the tax. Despite these shortcomings, I feel this data gives us an approximation of the effect of the sales tax. (Click on the table to view a larger version, or see below for how to obtain the data.)
As you might imagine, as income rises, so does total taxable expenditures. Of interest, the percent of expenditures that are taxable is relatively constant across income levels.
This means that the lowest income class of families experience an increase nearly four times the magnitude as do the highest income families, as a percentage of after-tax income. This is the regressive nature of sales taxes illustrated in numbers, and is something that Wichita policy makers and voters should consider.
I’ve made the data available as a Google Docs spreadsheet. Click here for access.
In this episode of WichitaLiberty.TV: We’ll talk about the proposed Wichita sales tax, including who pays it, and who gets special exemptions from paying it. Then, can we believe the promises the city makes about accountability and transparency? Finally, has the chosen solution for a future water supply proven itself as viable, and why are we asking low-income households to pay more sales tax on groceries for drought protection? View below, or click here to view at YouTube. Episode 63, broadcast October 26, 2014.