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Archive for Friday, March 16, 1990

SCHOOL SALES TAX

March 16, 1990

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A plan to raise the state sales tax to reduce property taxes levied by local school districts appears to be gaining some steam in the Kansas Legislature.

Lobbyists for education, business and agriculture groups have given their support to a measure that would raise the state sales tax 1 cents on the dollar. The plan would submit to voters in August a constitutional amendment raising the sales tax from 4.25 percent to 5.75 percent, and using the $364 million in new revenue to reduce property taxes, dollar for dollar.

Assuming that the state could really pull off that feat actually replacing property taxes, dollar for dollar so that it doesn't raise taxpayers' overall tax burden there still are questions about how raising the sales tax would shift the tax burden and how the new revenue would be distributed.

One of the main questions the measure raises is a philosophical one. Would Kansans rather pay taxes on what they buy or what they own? Lower property taxes would presumably benefit low- and middle-income property owners and property owners, like retired people, who live on fixed incomes. But at least some of that gain will be offset by the sales tax. Elderly people living on Social Security or a single mother trying to raise a family still have to buy food and clothing and the additional sales tax would be levied even on such essential items.

Owners of valuable property probably would gain the most. Those people probably include more people who both earn and spend more. The higher sales tax would eat up part of what they save in property taxes, but they might still come out ahead.

Meanwhile, on the other end of the tax formula, the state would be divvying up its sales tax revenue to school districts. Initial estimates from the state indicate that school districts would get enough state aid to enable them to cut the amount of money they collect in property taxes almost in half.

But would that actually happen? Will school taxes in Douglas County or Johnson County or Shawnee County actually be cut in half? Or, as the current school finance formula does, would the state try to balance the resources of the state's school districts by giving proportionately more money to poorer districts? Because there are more shopping facilities in metropolitan areas, more sales tax would be collected there. But those areas also tend to have wealthier school districts, so much of that sales tax money undoubtedly would be diverted to other parts of the state. Is that an acceptable trade-off for people who live in those areas?

Another possibility to consider is that school districts might continue to raise their property tax levies in spite of the additional state aid. Does the Legislature plan to place some kind of cap on property tax levies to prevent that action?

A final factor in the decision that may face Kansas voters is just how high a sales tax they are willing to bear. The sales tax already has been raised several times in recent years, including a -cent raise last year to help fund highway improvements. Like property taxes, sales taxes have never gone down. How long will it be before Kansas voters are asked to approve an 8 percent or 10 percent sales tax?

Supporters are calling the sales tax proposal the most even-handed way to deal with inequities created by property reappraisal and classification. It might be one solution, but other options deserve our attention.

If the Legislature decides, however, to put the proposal to a statewide vote the state may at least learn whether Kansans are really upset enough about their property taxes to commit themselves to a 1 -cent sales tax hike.

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