Earnings Tax

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aknowledgeableperson
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Re: Earnings Tax

Post by aknowledgeableperson »

GRID wrote: Back to the kcmo etax, anybody have any stats on exactly how much this tax generates vs say the property taxes?  I would be curious to see how much property taxes would have to be raised to make up the difference.
From page 463 of the city's 2008/09 budget.

The General Fund has a budget of $645M.  Of that $111M is property taxes, $206M is E-taxes, and $102M is utility taxes.

All sales taxes collected by the city are not used for general fund purposes but are for special uses and the sales tax collections are estimated to be $166M.
I may be right.  I may be wrong.  But there is a lot of gray area in-between.

Maitre D
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Re: Earnings Tax

Post by Maitre D »

That still leaves a funding gap of 60M.
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aknowledgeableperson
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Re: Earnings Tax

Post by aknowledgeableperson »

Maitre D wrote: That still leaves a funding gap of 60M.
You are counting the $166M as part of the general fund revenue.  Read post again.  The sales taxes collected DO NOT go into the general fund, they go into special accounts such as capital improvements, transportation, and so on.
So the gap is $226M.  That comes from various sources such as property rentals, court fines, and so on.  I just listed the major revenue sources.  If you desire more detail go to the city's budget found in kcmo.org, page 463.
I may be right.  I may be wrong.  But there is a lot of gray area in-between.

shinatoo
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Re: Earnings Tax

Post by shinatoo »

I've been doing some thinking about taxes lately, and I'm probably way off base, but why don't we go for the top line of where the economy moves in the US. FedWire and CHIPS combined do about 1 Quadrillion in bank to bank transfers a year. If we taxed those transfers at 3/10 of 1% (.003%) we would fully fund this years budget and eliminate all corporate and income taxes. Raise that to .005% and you could eliminate payroll taxes. even with a massive behavioral change in the way people consider moving money you could still keep the tax under 1%.

There would be no shelter other than to physically turn assets into hard currency and move it.
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Re: Earnings Tax

Post by FangKC »

Would this be a method to stop companies from moving their headquarters overseas, and keeping money and profits offshore to avoid paying taxes?

shinatoo
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Re: Earnings Tax

Post by shinatoo »

that, and I originally started thinking about it when I heard a report on money laundering and illegal activities still having to use the banking system to move money around. It's really the top line (as I understand it) of the economy.
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Re: Earnings Tax

Post by bobbyhawks »

shinatoo wrote:There would be no shelter other than to physically turn assets into hard currency and move it.
So... from figurative tax shelters to literal tax shelters? Bankers in the Caymans to Bunkers in the Caymans? Maybe all of the world's hard currency could be sent to space, where there are no laws. LLCs with a PO box on a satellite in space? (side note: I am so pleased that this wiki entry exists - http://en.wikipedia.org/wiki/Space_law)

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normalthings
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Re: Earnings Tax

Post by normalthings »

We are just 3 months away from voting on E-Tax renewal. I have heard nothing campaign wise.

kcmiz
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Re: Earnings Tax

Post by kcmiz »

In the long run, the city will be better off if voters vote down the earnings tax. It will sting the budget for sure.

Rightly or wrongly, the e-tax serves as a psychological barrier for some individuals to live in KCMO and for businesses to move in from. Without it, I think you’d see a steady rise in population and business inflows.

A disciplined city manager and city council can make this work by focusing on incentivizing denser development in the core to drive sales and property tax revenue and right sizing the city budget (looking at you PD and FD).

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normalthings
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Re: Earnings Tax

Post by normalthings »

kcmiz wrote:
Fri Jan 29, 2021 2:26 pm
In the long run, the city will be better off if voters vote down the earnings tax. It will sting the budget for sure.

Rightly or wrongly, the e-tax serves as a psychological barrier for some individuals to live in KCMO and for businesses to move in from. Without it, I think you’d see a steady rise in population and business inflows.

A disciplined city manager and city council can make this work by focusing on incentivizing denser development in the core to drive sales and property tax revenue and right sizing the city budget (looking at you PD and FD).
I don't think there is any way that an earnings tax removal can be good in the short or the long run. There is no way to come back from such a big cut and the City/Council have many times proved to not be focused on incentivizing denser urban core development.
Last edited by normalthings on Fri Jan 29, 2021 2:49 pm, edited 2 times in total.

flyingember
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Re: Earnings Tax

Post by flyingember »

normalthings wrote:
Fri Jan 29, 2021 2:32 pm

I don't think there is anyway that a 50% budget cut can be good in the short or the long run.
You're not even close

The e-tax is 15.2% of revenues in the 2020-21 budget
water and sewer + aviation are silos. Removing them it's 23.4%


page 47

https://drive.google.com/file/d/1RBelIZ ... k6xdE/view

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normalthings
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Re: Earnings Tax

Post by normalthings »

flyingember wrote:
Fri Jan 29, 2021 2:44 pm
normalthings wrote:
Fri Jan 29, 2021 2:32 pm

I don't think there is anyway that a 50% budget cut can be good in the short or the long run.
You're not even close

The e-tax is 15.2% of revenues in the 2020-21 budget
water and sewer + aviation are silos. Removing them it's 23.4%


page 47

https://drive.google.com/file/d/1RBelIZ ... k6xdE/view
I stand corrected! I still don't think that a 15.2% cut after a year of huge cuts is a smart choice. I agree that it could work if you unannexed the post-1960s sections of the city but that will never happen. We already seem to have lost a good bit of focus on densifying the urban core so I just don't see this happening without a regime change.

Business-wise, I don't think KC would do any better considering that both states have an income tax. We wouldn't have the no-income-tax at all advantage that Texas, Tennessee, and Florida pedal.

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Re: Earnings Tax

Post by flyingember »

If the e-tax drops and the city de-annexes the suburbs it's a much worse situation. It's the property taxes
Sure, the expenses go away but my rough guess is that post-1960s suburbs residents pay in more than they receive from the city

the e-tax is 50% from outside the city so the property tax is a bigger percentage from residents. 9.6% vs 7.6%

Remember, downtown is heavily subsidized. KCSD has lost 24% of it's possible income to abatement and it's not going to be single family homes or affordable housing apartments missing from the numbers.

the taxes from elsewhere in the city are subsidizing those incentives. the problem is the relative home appraisals between places in Shoal Creek and the east side. If the city brings in more resident taxes from property taxes and downtown value is tied up in incentives then the suburban property taxes are what's left if the e-tax is voted down

The uproar over jackson county appraisals? that's how you get rid of the e-tax, by raising home values to match the suburbs.

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normalthings
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Re: Earnings Tax

Post by normalthings »

flyingember wrote:
Fri Jan 29, 2021 3:11 pm
If the e-tax drops and the city de-annexes the suburbs it's a much worse situation. It's the property taxes
Sure, the expenses go away but my rough guess is that post-1960s suburbs residents pay in more than they receive from the city

the e-tax is 50% from outside the city so the property tax is a bigger percentage from residents. 9.6% vs 7.6%

Remember, downtown is heavily subsidized. KCSD has lost 24% of it's possible income to abatement and it's not going to be single family homes or affordable housing apartments missing from the numbers.

the taxes from elsewhere in the city are subsidizing those incentives. the problem is the relative home appraisals between places in Shoal Creek and the east side. If the city brings in more resident taxes from property taxes and downtown value is tied up in incentives then the suburban property taxes are what's left if the e-tax is voted down

The uproar over jackson county appraisals? that's how you get rid of the e-tax, by raising home values to match the suburbs.
It appears from the link above that the single biggest tax source is now sales tax. I would be very surprised if sales tax did not follow every other tax in most being concentrated between river and brookside.

Most of the city's property tax income comes from Downtown to Plaza. Much of those incentives from the last development wave are rolling back onto the full tax roll. Much of these areas on fully on the tax roles. Property taxes in the suburbs do not pay in as much as they receive and most of those big surburban developments also apply for incentives despite the need for new infastructure to support them.. The infrastructure per family and per acre there in the northland much much higher than in the core. For most of the northland residential areas, their per acre property value is not much greater than the east side despite the vast difference in home prices. This is one of the biggest points behind the Strongtown movements.

Image
Last edited by normalthings on Fri Jan 29, 2021 4:48 pm, edited 2 times in total.

flyingember
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Re: Earnings Tax

Post by flyingember »

Potential property tax. The same map with abatements removed would be very different

Think about that map with 25% of taxes inside the KCSD removed from the tax rolls

Also, I couldn't find that map again, it's very useful. I'm saving it

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Re: Earnings Tax

Post by flyingember »

In Kansas City last year, at least $175 million in new tax money that would have gone to city, county, school district and library district budgets, among others, instead subsidized development projects that received tax breaks or are supported by city debt.

The city’s share of that amount in tax redirections was nearly $94 million last year. That’s more than the city spends on basic services like sidewalks, street and bridge maintenance, snow removal and trash and recycling combined.
https://www.kansascity.com/news/busines ... 54842.html
Aug 2019

The current property tax value in the budget is $166.5 million. That shows just how much of the city is abated, and it's clearly not reducing the taxes in the green areas

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normalthings
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Re: Earnings Tax

Post by normalthings »

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Last edited by normalthings on Fri Jan 29, 2021 5:00 pm, edited 3 times in total.

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normalthings
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Re: Earnings Tax

Post by normalthings »

flyingember wrote:
Fri Jan 29, 2021 2:44 pm
normalthings wrote:
Fri Jan 29, 2021 2:32 pm

I don't think there is anyway that a 50% budget cut can be good in the short or the long run.
You're not even close

The e-tax is 15.2% of revenues in the 2020-21 budget
water and sewer + aviation are silos. Removing them it's 23.4%


page 47

https://drive.google.com/file/d/1RBelIZ ... k6xdE/view
Upon further review, I believe pre-corona it was that the E-tax made up close to 40% of the city's basic services budget. That is based on this KCStar article.

https://www.kansascity.com/news/politic ... 92592.html

Looking back to before corona (2018), it appears that the city's revenue structure was a bit different. Earnings tax overall used to be a bigger piece of city revenues pre-corona.
According to the CAFR, earnings and sales tax make up 21.4% and 24.0% of Kansas City's revenue, respectively.... Property taxes account for 11.2% of the city's revenue.



Looking back in this thread to 2008, it was a similar ratio in play.
The General Fund has a budget of $645M. Of that $111M is property taxes, $206M is E-taxes, and $102M is utility taxes.
Last edited by normalthings on Fri Jan 29, 2021 5:22 pm, edited 2 times in total.

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normalthings
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Re: Earnings Tax

Post by normalthings »

flyingember wrote:
Fri Jan 29, 2021 4:49 pm
In Kansas City last year, at least $175 million in new tax money that would have gone to city, county, school district and library district budgets, among others, instead subsidized development projects that received tax breaks or are supported by city debt.

The city’s share of that amount in tax redirections was nearly $94 million last year. That’s more than the city spends on basic services like sidewalks, street and bridge maintenance, snow removal and trash and recycling combined.
https://www.kansascity.com/news/busines ... 54842.html
Aug 2019

The current property tax value in the budget is $166.5 million. That shows just how much of the city is abated, and it's clearly not reducing the taxes in the green areas
The previous image was made after subtracting taxable vs nontaxable land. They definitely took abatements and incentives into consideration.

White: Roads, Rails, etc
Grey: Exempt
Green: Taxed

It generally looks right to me: I can see Loews and KC Star missing, much of P&L, a few Crossroads projects, Government and non-profit holdings, etc all in grey. I know 531 Grand got incentives and it is definitely greyed out. If anything, the previous map would be much more heavily skewed towards downtown if it didn't take abatements into account (which will expire in not too long). Incentives and abatements aside, 1% of the city's land area (downtown) produces 25% of total revenues for the city.

Image
Last edited by normalthings on Fri Jan 29, 2021 5:19 pm, edited 1 time in total.

kboish
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Re: Earnings Tax

Post by kboish »

The idea that a Northland neighborhood is subsidizing downtown is ridiculous. Town Pavilion paid $1.6 million in total property taxes last year with $250k going to the city. A 200,000 dollar house pays what in taxes per year? $3,00? it would take 530 Northland houses to offset just that one buildings payments.

Not to mention a disproportionate share of sale tax is generated downtown.

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