Too bad for Jayhawk fans this has nothing to do with Charlie Weis' first season on the gridiron.
Also, it is the wrong Top 10. A more apt description would be that Kansas has the 9th HIGHEST combined (state and local average) sales tax rate in the country. This according to a new study from the Tax Foundation in Washington
As KPI fiscal analyst Todd Davidson wrote in our most recent paper
on tax reform,
|A higher sales tax increases the cost of a product, and like any other price increase, prompts customers to purchase that product elsewhere (even across state lines) at a lower price or cut back on other purchases to offset the price increase. Either way, state retailers suffer an economic loss that impacts their employees and customers; lower profits reduce the amount available to compensate employees and/or may result in a price increase in an attempt to offset the lost income.
What does that mean in the Kansas City area where it is very easy for people to travel across state lines to make a purchase? Say you want to be ready for the upcoming football season with a new TV and you live in Wyandotte County. BestBuy.Com
has a nice looking 65" Sony flatscreen TV for $2,999.98...even Energy Star rated. A purchase certainly outside of most family budgets, but you would pay an extra $62.10 in state sales tax if you purchased the TV at a Best Buy in KCK instead of going a few short miles into Missouri. Keep in mind, that is before any local sales taxes are applied.
$62 might not sound like to someone spending $3K on a TV, but the point is obvious. Take this in the aggregate and Kansas is potentially losing a lot of sales tax revenue because the state remains uncompetitive.
In their analysis, the Tax Foundation reminds us...
|Avoidance of sales tax is most likely to occur in areas where there is a significant difference between two jurisdictions' sales tax rates. Research indicates that consumers can and do leave high-tax areas to make major purchases in low-tax areas, such as from cities to suburbs. For example, strong evidence exists that Chicago-area consumers make major purchases in surrounding suburbs or online to avoid Chicago's 9.5 percent sales tax rate.
At the statewide level, businesses sometimes locate just outside the borders of high sales tax areas to avoid being subjected to their rates. The state of Delaware actually uses its state border welcome sign to remind motorists that Delaware is the "Home of Tax-Free Shopping." State and local governments should be cautious about raising rates too high relative to their neighbors because doing so will amount to less revenue than expected, or in extreme cases, revenue losses despite the higher tax rate.