Editorial: More transparency on our tax dollars is needed

photo by: Journal-World Photo Illustration

Lawrence Journal-World Editorial

Taxes are a necessity because government is a necessity. In today’s toxic political environment, there are some who refuse to concede either point, but they are clear nonetheless.

But it also is clear that the power to tax can be used too easily, at times. The inner workings of government are not designed to be a spectator sport, and, as such, many Americans simply don’t pay much attention. There are countless budget hearings across this state alone that never draw a single member of the public to comment on millions upon millions of dollars of taxpayer funds.

Some of that fault certainly rests with a public that has become too apathetic, but it is incumbent upon government to do all it feasibly can to encourage the public’s participation. That’s why a so-called taxpayer transparency bill that is working its way through the Kansas Legislature is worth a try.

Senate Bill 13 essentially will require local governments of all types — all the way from the county commission to the smallest of township boards — to send a written notice to every taxpayer if that government intends to raise more money via property taxes than it did the year before. In other words, if a city raised $1 million with property taxes in 2020 and it proposes raising $1.1 million in property taxes in 2021, it needs to send a letter or email to each taxpayer notifying them that it wants to use property taxes to raise more money. Importantly, it also would require that city commission to hold a special hearing that forces the commissioners to take a specific vote acknowledging that they are increasing the property taxes they collect.

While it is a shame governments will have to go to the time and expense of mailing thousands of letters, it will be worth it if they provide greater understanding of how our tax system works. In places like Lawrence, it can be difficult for the ordinary taxpayer to understand, at times. It is not uncommon in a place like Lawrence for the amount of property taxes the government collects to increase significantly, even if the property tax rate has not increased at all. If property values, for instance, rise 3% on average, the local government will collect 3% more in property taxes, even if the tax rate doesn’t increase.

That is not to say such an increase is inappropriate. Governments have rising costs of doing business just like households do. But what about when property values rise 8% by average and the cost of doing business has increased by only 3%? That would be good information for taxpayers to know, and there are plenty of governments that don’t do a good job of calling attention to that scenario currently.

So, Senate Bill 13 won’t be perfect, but it is worth a try. It looks like it has a good chance of becoming law. The conversation shouldn’t stop there, though. The real issue with property taxes in Kansas is that the system has a major flaw. Property taxes are an unfair tax because they are the only major tax that forces you to pay before you have received the value of what you are being taxed upon.

Consider this: I buy $100 worth of groceries, and I pay my 10% sales tax on them when I have the groceries in hand. I have the value of the food right away. I get $100 in wages, and I have the income tax withheld from my check at the time I get the check. I have the benefit of the wages right away.

It doesn’t quite work that way with property taxes. I have a $100,000 home in 2020, but the county appraiser says it is worth $110,000 in 2021. I’m now paying taxes on the $110,000 value. But, unless I want to sell my home right away, I don’t get any immediate value in the supposed $10,000 increase of my real estate holdings. Nonetheless, I have to pay the tax on my supposed increase in wealth right away.

It is a major flaw in Kansas’ tax system. It could be fixed. We could still tax property wealth but simply change the formula. Maybe a special tax should be due when you sell a property. There are any number of possible ways to change the formula and make it more fair.

But that would be an extraordinary task for Kansas lawmakers. It would take exceptional bipartisan leadership to accomplish. That is something we don’t have today. Senate Bill 13 won’t give us that, but at least it will give us a clearer picture of what we do have.

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