Taking a Stab at “Tax Stacking”
A Farmington lawyer, Tom Burcham, is suing southern Missouri towns that “tax stack” — a practice by which municipalities circumvent the state-mandated limit of an additional 1.5 percent in sales taxes by adding additional increases through referendum.
In the suits, Burcham and his clients seek damages and attorney fees, as well as for “illegal taxes” to be returned to the residents. He has won suits in Purdy and Iberia already, and has cases pending in six other cities.
While I admire the quest to lower taxes, I am unsure whether I agree with this particular method.
First, any money that Burcham wins in damages — which amounted to $20,000 plus attorney fees from Iberia, population 620 — comes from the town’s coffers. (He did donate to charity the money he has received so far, so one can’t accuse him of a get-rich-quick scheme, but, still, high damage awards aren’t easily accommodated by small town budgets.)
Although it would be a nice gesture, agitating for the return of the disputed tax collections to citizens is infeasible — according to a Missouri Municipal League lobbyist, at least, who estimated such rulings would bankrupt the towns. Burcham has not yet convinced a town to refund the taxpayers directly, but he is still trying.
Another factor is that these projects were voted on in referendum by the public, and mainly fund projects like improved roads and fire stations. If a particular town decides to increase sales taxes to pay for a public works project, should the state be able to cap that rate? This becomes more complicated when one considers that the towns in question were following a 1999 Department of Revenue interpretation of the existing statutes — an interpretation with which Burcham disagrees.
Is this a laudable crusade for lower taxes, or a strategy that ultimately harms the very people it intends to help? Any thoughts?
I support lower taxes anywhere, for anyone, by any means
Comment by vroman — June 25, 2009 @ 12:10 p.m.
Even when those lower taxes involve lower taxes for some but not others via a heavy dose of central planning in some city economic development office?
Comment by David Stokes — June 25, 2009 @ 12:14 p.m.
Thank God the state caps the ability of cities to impose taxes. Local control is not automatically good in every area of government. Without state limits, we would have more and higher sales and property taxes throughout Missouri, and probably more, and higher, earnings taxes, too.
Comment by David Stokes — June 25, 2009 @ 12:16 p.m.
David, Vroman’s position hasn’t changed since we discussed a similar topic in the comments last fall…
Comment by Eric D. Dixon — June 25, 2009 @ 1:13 p.m.
he should look into how sales taxes are imposed on citizens without a vote. these are being used for private benefit.
Comment by southkc — June 25, 2009 @ 11:06 p.m.
the sales taxes are in community improvement districts.
Comment by southkc — June 25, 2009 @ 11:08 p.m.
Transportation Development Districts (TDDs) and the above referenced CIDs can be worthwhile but they indeed are fraught with risk, mostly involving a lack of transparency and accountability. Thanks for the comments, southkc.
I have done more research on TDDs than CIDs, but they do have a positive side. A TDD is a way for the people who choose to use an entity, like a new store, to pay for that asset’s accessability. However, as the state auditor has documented, far too often the extra TDD tax is hidden among other taxes and fees and the people paying it have no idea they are doing so. The laws requiring TDDs to carefully disclose and account for what they do need to be strictly enforced. I would assume I feel the same way about CIDs.
Comment by David Stokes — June 26, 2009 @ 10:39 a.m.
ok, regardless of whether TIF type operations are beneficial (I maintain they are more good than bad), this is not really the concern caitlin brings up, which is what about the poor little townie govts that are having their revenue generation hamstrung by statewide tax caps. if the town govt cant fund all their desired operations w reduced budget, they need to cut services, or find more efficient ways to conduct business. if the town residents REALLY wanted these things, but mogov wont let them be taxed that highly, they could write a check voluntarily to their local fire dept.
Comment by vroman — June 27, 2009 @ 2:21 a.m.
In Kansas City cid taxes are being imposed at most shopping centers to pay for operating expenses(snow removal,landscaping, cutting the grass,etc.) these are not for public benefit. I have no problem with tdd because the road becomes public property and everyone benefits. While cids are using public taxing power for a private revenue stream. I can not understand how this is not violation of the Hancock Admendment. When the businesses petition city hall and city hall imposes a sales without a vote of citizens.
Comment by southkc — June 27, 2009 @ 9:04 a.m.