May

25

Turning off the spigot?

May 25, 2005 |

There’s no question Downtown is booming. It’s the hottest real estate market in the entire metro area right now. Much of that success is due to generous tax breaks. First there was the Missouri Historic Tax Credit that made rehabbing old industrial buildngs affordable. Now there are property tax abatements for buyers of the condos.

The tax breaks definitely worked as intended: to jump-start redevelopment in an area that was not very attractive for private investment. But how long will the subsidies continue? If someone can afford a $400,000 loft, can’t they also afford a $2000 property tax bill? Should the owner of the $10 million penthouse at One Park Place be excused from paying any property taxes? If the new residents aren’t paying taxes, will the rest of us be expected to pay for the roads, libraries, schools, etc. that they will be using?

The Pitch’s David Martin has an excellent piece on this emerging issue of ballooning tax subsidies and the complete lack of any policy to regulate them.


Comments

4 Comments so far

  1. Bill on June 4, 2005 10:11 pm

    One important fact David Martin overlooked in his article is the fact that unlike any other city in the region, KCMO charges residents an earnings tax. This creates a financial incentive for people to move to the suburbs. A counter-incentive is needed to lure them back, and that’s the function that the property tax abatement serves.

  2. michael on June 7, 2005 11:41 am

    Well then, I guess you just made a case for eleminating the the earnings tax if that will stop suburban flight.

    Actually, to be factual, KCMO charges people who work in the city an earnings tax… not residents. Further, you would have to be earning some serious money for the earnings tax to match the money that is abated on the real estate. Further, none of the earnings tax supports education where as the abated taxes cost school districts.

  3. BlogKC on June 7, 2005 3:39 pm

    The earnings tax is levied on anyone who works OR lives in the city. You still pay the tax if you live in the city and work in the suburbs.

    It’s not that big of a deal. It’s only 1%. If it is really a disincentive to living in the city, why is KCMO building more new houses than Overland Park, Olathe, and Lee’s Summit combined? The Clay County part of KCMO is the fastest growing area in the region, outranking even Johnson County. The people flocking there don’t seem to mind the earnings tax.

  4. John on March 14, 2008 12:12 pm

    List Your FSBO on Colorado MLS and save $1000s in broker commissions. Info at http://www.denvercoloradorealestate.us

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