Archive for Monday, May 24, 2010

Please explain

Perhaps further explanation will ease public concerns about the new Community Improvement Districts, but we’re not so sure.

May 24, 2010


Lawrence city commissioners were smart to delay consideration of their first request to form a special taxing district to benefit a development near 23rd Street and Ousdahl Road.

A policy for how the city would utilize the new Community Improvement Districts approved by the Kansas Legislature last year got quick approval, but when the commission tried to apply that policy to a specific request to collect an additional 1 percent sales tax in the new district, public opposition was quick and strong. During discussion at Tuesday’s commission meeting, Mayor Mike Amyx concluded, “I think it is important to take a step back and explain this better.”

The question now is whether any amount of “explaining” is going to make local residents feel better about use of this economic development “tool” in Lawrence.

It’s easy to see why businesses find this incentive attractive. It basically allows them to sell everything in their stores for 1 or 2 percent more without having to actually raise the price that consumers see on the shelf. They can then spend that money on a whole variety of costs of doing business that their competitors have to cover without benefit of additional sales tax revenue.

It’s also understandable that, at least at first glance, city commissioners could be in favor of such a plan. It provides an incentive for businesses without placing any financial obligation on the city.

But the explanation local residents want to hear is why, as a matter of principle, private businesses should be allowed to collect a tax from the public — without any special notice — and use that money not for a public purpose, but to offset their private business costs.

Kansas legislators apparently thought that was OK, but Lawrence residents aren’t so sure. Perhaps city commissioners can explain it to the public’s satisfaction, but they haven’t done it yet.


Paul R Getto 7 years, 9 months ago

At a minimum, there should be a sign (large) on the door so those who enter know they are 'special' customers paying a 'special' tax. Let the consumers decide.

mickeyrat 7 years, 9 months ago

Okay, this CID question is making me feel pretty dull. I'm probably missing something really obvious, and hope others posters can enlighten me: if a CID "basically allows them to sell everything in their stores for 1 or 2 percent more without having to actually raise the price that consumers see on the shelf," where does the money that they can spend "on a whole variety of costs of doing business" come from? Does it get subtracted from the sales tax they would otherwise pay the city, and if not, how would it be different from a business raising prices to cover overhead costs?

If it is a tax break for self-selected businesses when our city budget is tight, I'd appreciate being told so in plain English, either by its supporters or the LJW. If I'm reading poorly or just being dense, I hope a fellow poster can correct me. My degree in fuzzy math isn't helping on this one.

Ann Gardner 7 years, 9 months ago

The additional sales tax is not a city sales tax. The revenue from the additional 1 or 2 percent sales tax stays with the businesses in the district; it doesn't go to the city.

mickeyrat 7 years, 9 months ago

Thanks, "additional sales tax" which the businesses/district keep clarifies the matter considerably.

Why the LJW would choose to include a phrase like "without having to raise the price consumers see" when talking about a phantom tax seems odd, though; makes me think it is either poor writing or deliberate obsfucation.

Thanks again for the clarification, Ann.

matchbox81 7 years, 9 months ago

The CID tax needs to be limited to those areas that wouldn't have been developaple without the added incentive to developers - i.e. blighted parcels that have been vacant for a long time, or to attract significant regional attractions that don't have another retail type in the city like a warehouse store or big sporting goods store. Using the tax as an incentive to develop parcels that would have already been developed without the tax, is a waste of tax payer dollars and a give away to developers. Also, if the developer sells this land after its developed, and was able to get a higher price because of the special tax, that portion of the higher price should go back to the city.

ralphralph 7 years, 9 months ago

The "Sneaky Tax" won't work if you let EVERYBODY in on it. It must be reserved for the special few.

Orwell 7 years, 9 months ago

Have you ever seen what happens to a city that lets its downtown deteriorate? Either the decay spreads outward or the city winds up spending lots more to "revitalize" the area – often both.

Richard Heckler 7 years, 9 months ago

Does this special tax help the World Company develop and or sell real estate?

How much will this cost the taxpayers with regard to new infrastructure etc etc etc aka taxpayer subsidies?

Richard Heckler 7 years, 9 months ago


We have a $180 billion dollar jobs bill likely to get a vote this week. Very few people know about it. But labor has made it a litmus test.

There’s $25 billion in Medicaid funding for the states. The summer youth jobs program pushed by the Congressional Black Caucus got in here as well. There’s also a five-year extension of the “doc fix,” ensuring Medicare reimbursement rates don’t plunge (that costs $65 billion). And funding will increase for infrastructure projects through another round of the Build America Bonds program and other tax credits.

So, what about the closing tax loopholes part?

Significant parts of the bill would be paid for by eliminating the tax incentives that encourage companies to ship American jobs overseas. The bill would prevent corporations from using current U.S. foreign tax credit rules to subsidize their foreign activities, and close a host of corporate tax loopholes that allow companies to avoid paying U.S. taxes through a variety of foreign tax credit schemes.

But here’s the best part. You know how working folks are required to pay regular income and employment taxes? Even if you are unemployed you likely have to pay the regular income tax on your unemployment insurance payments. But wealthy investment fund managers don’t. No siree. The fees they “earn” are taxed as so-called “carried interest”, a tax loophole that allows their income to be taxed at only 15 percent, as if it were capital gains.

Super-rich hedge fund managers, private equity fund managers and other high-flying Wall Street traders pay a much lower tax rate than working people do — even if you’re on unemployment! And taxpayers are left holding the bag for an estimated $2 billion a year in lost revenues due to this one loophole.

Well, they helped bring down the economy while making out like bandits — and now it’s high time they paid their fair share. This jobs bill would close their “carried interest” tax loophole.

The impact of this jobs bill on the economy is strongly positive in the near term, while the impact on our long-term fiscal problem is insignificant.

This is about as much of a “jobs bill” as we’ll get for the rest of the year, which is why labor has jumped aboard so strongly. Richard Trumka’s statement on this is nothing short of aggressive:

If you’re not for this bill, you’re not for jobs. Period.

And please, no more excuses about the budget deficit—unless and until you’re willing to make Wall Street pay its fair share to bring down the deficit. The people who are always saying “no” to jobs because of the deficit are often the same people who voted to squander our hard-earned budget surpluses so they could shower undeserved tax breaks on rich people during the Bush years.

In the midst of an unemployment crisis, measures like this are sorely needed, and we’ll see if Congress has enough sense to realize that this week.

Richard Heckler 7 years, 9 months ago

Yes but Lawrence being over retailed is probably why a special tax is necessary. Indirectly this tax generates a profit for the business.

Until the economy is recognized as stable again allowing more new retail will only empty our wallets. It's called nickle dimed ..........

What would benefit the city in a substantial way is spend tax dollars repairing sidewalks and DOES NOT expand the city's tax bill such that new infrastructure does and always will. YES put people in Lawrence,Kansas to work fixing existing infrastructure.

ralphralph 7 years, 9 months ago

I'd favor the extra tax at Lowe's, IF they had to give all the extra money to the locally-owned business that are getting screwed-over by this sort of development.

bearded_gnome 7 years, 9 months ago

simply dishonest.
call it a tax, but money doesn't go to government or public works.

just because it's legal doesn't make it moral commissioners.

require a sign posted at every business with this special "tax" that isn't a tax.
or "just say no."

It’s easy to see why businesses find this incentive attractive. It basically allows them to sell everything in their stores for 1 or 2 percent more without having to actually raise the price that consumers see on the shelf. They can then spend that money on a whole variety of costs of doing business that their competitors have to cover without benefit of additional sales tax revenue.

---raise prices, call it tax, but money goes into your own pocket. shell game, ya' think?

cummingshawk 7 years, 9 months ago

Who gets the extra money from this stealth tax? The business owner or the land owner? And is this theft, excuse me, this fee transferred to the next owner automatically? Why give-up a revenue stream good for 22 years, unless a new owner starts a new 22 year period without having to bother getting the nearly automatic approval from the city.

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