Iowa City wants to push for a local-option sales tax (LOST) as part of its plan to restructure the Iowa City Police Department. So I am left once again to petition my government on behalf of the principle of economic justice.
Sales taxes are more regressive than property taxes. What is regressivity? This means that the poor pay a higher percentage of their income in taxes than do the wealthy. Relative to income, the poor pay more than twice what the middle class pay, and nearly five times the amount the wealthy pay. Even with exemptions, sales taxes hit the poor hardest.
So who are the poor? There are more poor women than poor men. Over half the children in Iowa are poor. Sales taxes hurt them the most.
So who benefits? The biggest property taxpayers in Johnson County will benefit the most. That includes: Coral Ridge Mall, Mid American, Hawk Landlord LLC, ACT, Green State Credit Union and the Graduate Hotel. They benefit the most. Is that really what we want to do? Cut taxes on those businesses, and shift the cost to poor kids? We would be literally taking money from people on Social Security, and using it to buy down the taxes of those corporations.
People like to talk about all the big things we could do with a sales tax. But we could do them right now with an increase in the property tax. That is correct. We can do it all with property taxes. Iowa City ranks No. 100 in property tax rate among Iowa’s cities at $40.77. That is lower than Des Moines, West Des Moines, Cedar Rapids, Davenport and many other cities.
Look at the language being used. The sales tax is “an opportunity we can’t pass up” and “leaving money on the table.” Why isn’t a property tax increase viewed as “an opportunity we can’t pass up?” I will tell you why. Elected officials are afraid to ask the people with money to pay more. So they squeeze the poor, who by and large don’t show up at council meetings. This is just a matter of political will.
Another problem with the sales tax is that services used solely by wealthy people tend not to be taxed. The services of accountants, attorneys, advertising, consultants and stockbrokers are not subject to sales taxes.
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Some folks are under the impression that renters do not pay property taxes. While it is true they do not pay them directly, renters are definitely covering the landlord’s property taxes! Assuming there is a demand, landlords will raise rents, regardless of taxes. Supply and demand drives the rental market — nothing else.
One argument sales tax proponents often make is that “outsiders” will help pay the tax. People who live outside of Johnson County will pay about 20 to 25 percent of the taxes collected. These are by and large not people from Chicago, however, but commuters who purchase goods on the way home. I have trouble saying that a person earning $25,000 should pay more tax just because she lives in Williamsburg, Riverside, West Branch, etc., especially when the local wealthy would be let off the hook at her expense. It is important that we think of our middle- and low-income neighbors who commute.
Republicans in the Iowa Legislature made the sales tax even worse a couple years ago, and pretty much impossible for me to support. At that time they required that at least 50 percent of any sales tax revenue goes toward property tax relief. GOP Legislators pretty much could not have been more intentional in screwing the poor.
There are several theological arguments against increasing the sales tax. I just happen to buy into a worldview that those who are able need to help those who are not. It is a basic organizing principle of any society. “The last shall be first and the first shall be last”; “Do unto others”; and “A rich man has a better chance of putting a camel through the eye of a needle than getting into Heaven.” Each of these argues against putting a greater tax burden on the poor. Let’s follow this lead rather than doing more to comfort the comfortable.
Frankly, I am really tired of wealthy people saying that sales taxes “aren’t that regressive.” Easy for you to say as you vote to cut your own taxes at the expense of our poorest residents! And repeating your false claim over and over does not make it true. This argument is shameful, really. We are just all so scared to ask the people with the most resources to pay for things!
Rod Sullivan lives in Iowa City. He serves on the Johnson County Board of Supervisors.