Sales Tax Rates - NOT insignificant

[solitude]

I've been concerned with the number of posts from people here at OKCTalk acting like keeping our 8.38% tax rate is no big deal. It's a VERY big deal. Any listings for "Great Cities For Business," "Great Places To Live," business considerations for relocation, etc. take the city sales tax into consideration. In fact, right now, Oklahoma City and Tulsa have some of the highest sales tax rates for major cities in the United States. Many suburban areas have higher rates (minimally) across the country than their big-city counterparts, so you must compare the rates in the major cities.

St. Louis just a couple of weeks ago approved a controversial sales tax hike from 7.74% - 8.24%. That's still below our sales tax rate.
(By the way, as an aside, St. Louis doesn't charge for garbage pickup.)

The highest sales tax rates in the nation are Memphis, Chicago and Baton Rouge at just over 9.00%.

Wichita is at 6.70%.

Texas is capped at a maximum statewide of 8.25% (also with no state income tax!).

Boston has one of the lowest at 5.00%.

A few random cities:

Little Rock 7.50%

Albuquerque 6.70%

Denver 7.72%

Miami 7.00%

Kansas City 7.5%

Washington D.C. 5.75%

Jacksonville 7.00%

Los Angeles 8.25% (The "Subway to the Sea" tax proposal of a half penny increase is meeting huge opposition.)

Salt Lake City 6.60%

San Diego 7.75%

Portland, OR - 0.00% (That's right - no sales tax at all in the state of Oregon and not allowed by any cities or towns.)

Some of the highest in the United States:

Memphis 9.25%

Chicago 9.00%

Baton Rouge 9.00%

Seattle 8.60%

San Francisco 8.5%

Tulsa 8.5%

Oklahoma City 8.38%

New York City 8.38%

As for groceries, none of the above cities charge full sales tax on groceries except:

Oklahoma City

Tulsa

Reduced tax rate on groceries: Little Rock, Kansas City, St. Louis, Chicago

All other cities above and all cities in 37 states do not tax groceries at all.

So, while I am voting "Yes" and hope others do as well, this tax that was promised to be temporary back in 1993 (some were skeptical and said, "Sure it will be" -- and were vilified) has continued for almost fifteen years. This regressive tax on top of our being a state with an income tax must stop somewhere. Being known as a city/state with high tax rates is not good for business. The state helps in bringing new business, despite the taxes, with many incentives and credits.

As we vote "Yes" - let's remember the temporary promise of this tax - just like there was a promise in 1993. This time, let's hold them to it and not continue to shell out for further demands from the basketball team (if they come) or any other private entities that want to feed at the public trough through regressive sales taxes. Not a single NBA city has ever used a sales tax in their public contribution. Never. Until now.

Let's also do our part to ensure that if and when the Sonics come to Oklahoma City that we, as good citizens, are not taken advantage of with lease agreements that are farcical. We also must remember that further demands down the road must be met with an understanding that helping make the city NBA-ready does not include continued public funding to capitalize the privately-owned Sonics.

With those thoughts - I close with a plea for a "Yes" vote March 4 for the temporary sales tax to continue - for up to 15 months. As promised.

[betts]

It is my plan to see how the Sonics do financially. If they are here, then there's far more of a commitment on the part of the league. Even in places like Memphis and Portland, where the owners are losing money by the bucketfuls, David Stern has not allowed the owners to sell the team to anyone who desires to take the team out of town. This is because both of them have relatively new arenas built for their teams, I suspect.

So, sorry for the digression, I believe that if the team is doing well financially, then should renovations or even a new arena come up for discussion, the owners should be required to do their part financially. If they too are losing bucketfuls of money, that will require further thought. We'll also by then have a much better idea of the economic impact of the team. As far as I'm concerned, since they've spent so much money on the team so far, and will likely have to spend close to another $100 million should they be allowed to move the team, this time they get a bye.

I think the fact that groceries are taxed is completely ridiculous, and I think we should make an attempt to get that changed. What are we doing with this money, as I don't see that we have infrastructure needs that are greater than other cities? The suburbs here have comparable taxes, so at least we're not higher than them.

As far as this being a temporary tax, I agree. I think, as much as I want to see Core to Shore implemented ASAP, it would probably be a good idea to take a break between this tax and any MAPS3 plans, if only to show the citizens that this is not a continuous, never ending tax. If we spend the already available bond money to develop the "Central Park", that should encourage the private investment and development west of it that will help put property tax monies in city coffers. I think that it's way to early to be funding a mass transit system. We need to see if we're going to develop the central business core and city density that will make mass transit, and the massive amounts of money it will require, practical. As far as the new boulevard is concerned, I am embarrassed to admit that I have no idea what the funding plans for it are. I would like to see it started too.

[bornhere]

You probably already know this, but in Oklahoma, cities can only get operating money from sales tax. They can use sales tax for other things as well, but the operating funds are required to come from sales tax. It's almost the reverse of the Oregon situation.

Part of the reason OKC's less-than-perfect bond rating is the city's reliance on sales tax, which experts say is les reliable than property or income tax. (Even though sales tax doesn't pay off bonds.)

[FritterGirl]

Oklahoma City and Tulsa have petitioned the statelegislature to allow them to seek alternative funding means for operating funds. I don't know all of the details of this proposal, but it would require a change in our current state law for us to changer our current tax structure.

[solitude]

One of the points being, of course, that if the "temporary" tax ends as promised, we will be at 7.38%; compare that to the list above and we're in the ballpark.

[betts]

You probably already know this, but in Oklahoma, cities can only get operating money from sales tax. They can use sales tax for other things as well, but the operating funds are required to come from sales tax. It's almost the reverse of the Oregon situation.

I actually didn't. And, since this is a great website where people know things, I'm going to show my ignorance and ask: Does this explain why our sales tax is higher? Because the city doesn't have access to other monies that cities in other states might?

[flintysooner]

Oklahoma state salex tax rate is 4.5%.
Texas for instance is 6.25%

[bornhere]

I don't have answer to that generally speaking. But I would bet that in at least some cases, you could find cities in other states where not only is the sales tax higher, but there are also municipal property and/or income taxes as well.

Sales taxes are more sensitive to ups and downs in the economy, or so I've been told.

[Patrick]

One of the points being, of course, that if the "temporary" tax ends as promised, we will be at 7.38%; compare that to the list above and we're in the ballpark.

I think most here would rather have an OKC with a 8.375% sales tax rate with an NBA team, and Core 2 Shore (MAPS 3) than have an OKC with 7.375% rate without all of the above things. Think if the rate had been 7.375% the last 15 years and we never would've passed MAPS or MAPS for Kids. Our city would be a dump. If you want change, you have to pay for it.

People complain about income tax, sales tax all the time. Truth is, even though some cities may have no income tax, or no taxes on groceries, or no sales tax, they're having to get their operating funds from somewhere.
Seattle didn't raise sales tax for improvements to their other sports venues, but they got it from the state instead.

I'd actually rather have higher sales taxes than other types of taxes....that way everyone pays, and there are no writeoffs for big corporations.

It all ends up being the same in the end.

[venture]

I wish when people compared sales tax between cities they would also show a comparision of property taxes, income taxes, and other taxes.

Where I grew up...you had local income tax, state income tax, property tax rates about twice what they are here, etc...the only difference they didn't allow sales tax on food. However, every tax the main city would pass for operating (garbage, police, fire) they would do it as an income tax and not a sales tax.

Oklahoma is not as bad off tax wise as people think. Filing taxes is definitely easier...since up there the local municipalities get into it over who can collect the income tax - typically the city you perform the work in.

[bornhere]

I'd actually rather have higher sales taxes than other types of taxes....that way everyone pays, and there are no writeoffs for big corporations.

When you get into big-ticket - I mean really big ticket - items, the rules are different. I don't know all the details, but my recollection is that certain kinds of constrcution equipment and other material is taxed differently than what you and I buy at Target, and is collected differently as well.

When the city built Bass Pro out of MAPS for Kids funds, the money used was from that 'specially taxed' revenue which had not been earmarked for anything directly involved with OCMAPS.

I'm sure I don't have the terminology right, but you get the idea.

[solitude]

I think most here would rather have an OKC with a 8.375% sales tax rate with an NBA team, and Core 2 Shore (MAPS 3) than have an OKC with 7.375% rate without all of the above things. Think if the rate had been 7.375% the last 15 years and we never would've passed MAPS or MAPS for Kids. Our city would be a dump. If you want change, you have to pay for it.

People complain about income tax, sales tax all the time. Truth is, even though some cities may have no income tax, or no taxes on groceries, or no sales tax, they're having to get their operating funds from somewhere.
Seattle didn't raise sales tax for improvements to their other sports venues, but they got it from the state instead.

I'd actually rather have higher sales taxes than other types of taxes....that way everyone pays, and there are no writeoffs for big corporations.

It all ends up being the same in the end.

I completely disagree. Sales taxes are not progressive at all - they are regressive. If you really wanted to put your money where your heart is then you should be campaigning for changes in the laws so OKC can install a Municipal Income Tax. I am guessing you wouldn't like that idea. The problem with funding these things with a sales tax is that a grocery cart full of groceries costs the same for Clay Bennett as it does for Patrick. The ideal of taxation goes out the window with that fundamental unfairness. With income/expenditure ratios, the cart of groceries might have cost you 10% of your income, while that same cart would be .0000000001% of Clay Bennett's income. A tax should be progresssive for a lot of reasons. Here's a page that explains why in a very simple fashion. Take a minute and read the first few paragraphs:
Regressive, Progressive taxes/taxation explained.

The obvious conclusion is that it's not, as you said, "all the same."

[solitude]

I wish when people compared sales tax between cities they would also show a comparision of property taxes, income taxes, and other taxes.

Where I grew up...you had local income tax, state income tax, property tax rates about twice what they are here, etc...the only difference they didn't allow sales tax on food. However, every tax the main city would pass for operating (garbage, police, fire) they would do it as an income tax and not a sales tax.

Oklahoma is not as bad off tax wise as people think. Filing taxes is definitely easier...since up there the local municipalities get into it over who can collect the income tax - typically the city you perform the work in.

Venture, You are absolutely right! However, the comparision breaks down at the cash register. All the taxes in those other cities, light years ahead of us, funded things that Oklahoma City has decided can't be funded. The old Oklahoma City Police Headquarters, for example, being renovated instead of building a new state-of-the-art facility due to "lack of funds." The issue isn't only how we should fund these things, but if we should fund them and right now, the priorities in this city are all out of whack. Hard choices have to be made with our current limitations. It's a model that has held OKC back for decades. Trying to do things like building a practice facility for the NBA with a sales tax is regressive and puts the burden on every one alike - no matter their lot in life. Neither option is ideal, but I sure know which one is fair and just - and which one is not.

[solitude]

Here's another way of looking at it.......Courtesy of the University of Texas.

[windowphobe]

The problem with funding these things with a sales tax is that a grocery cart full of groceries costs the same for Clay Bennett as it does for Patrick.

What a shame. People are being treated equally by the law. Obviously something's got to be done about that, and soon.

[solitude]

What a shame. People are being treated equally by the law. Obviously something's got to be done about that, and soon.

Remember, it's about the tax RATE.....how is that equal? Are you suggesting that Bill Gates and Sumner Redstone should be taxed at the federal level at the same rate as you? Even though what might be a hardship on you, with the tax rate ceilings rolled back over the past couple of decades, would equal what amounts to a buck fifty for Gates and Redstone? I didn't come up with that, Warren Buffett did. I heard him say that he figured it out for himself - and it was true! He said a roughly thousand dollar tax payment for the average family in Omaha was equivelent to his paying a dollar and fifty cents in taxes. That's why taxes need to be progressive. Being equal, as you suggest, means we would all feel the pain in the same fashion. There's no equality in the "flat" sales tax either when you consider the chart in my last post. When the rate is the same, the poor and middle class pay a higher percentage of their income because they pay the same sales tax rate. That's equality? No, that's the very definition of regressive.

[dismayed]

Two things about the original post.

First, although Texas doesn't have an income tax, the total assessed tax on an average person is higher in Texas than it is in Oklahoma. That is because although Texans don't pay income taxes, their other taxes that they do pay are much higher. The last time I checked property taxes down there were triple what we pay this side of the border. So just focusing in on sales tax doesn't really show the big picture, unless you are arguing you want to do away with it because it is a regressive tax, etc.

Secondly, just speaking from personal experience, although yes taxes are a consideration when a business is looking to locate somewhere honestly it is probably way down the list at around item #10 or 11. The top factors are always going to be things like 'are there enough skilled workers in the area...' and 'where is my customer located....'

Just my two cents.

[OU Adonis]

Are you suggesting that Bill Gates and Sumner Redstone should be taxed at the federal level at the same rate as you?

Actually yes. I am for a flat tax.

[andy157]

When you get into big-ticket - I mean really big ticket - items, the rules are different. I don't know all the details, but my recollection is that certain kinds of constrcution equipment and other material is taxed differently than what you and I buy at Target, and is collected differently as well.

When the city built Bass Pro out of MAPS for Kids funds, the money used was from that 'specially taxed' revenue which had not been earmarked for anything directly involved with OCMAPS.

I'm sure I don't have the terminology right, but you get the idea.

I believe "Companion Use Tax" is the proper term. They also funneled money from the origional Maps fund, and the Police and Fire projects fund to pay for Bass Pro.

[flintysooner]

In Oklahoma City the estimated median household income in 2005 was reported as $37,375 by city-data.

I could not find a reliable percentage of taxes paid but I assume it is something.

In one consumer spending survey I checked housing cost at that approximate income level was nearly one third. Transportation cost which was largely fuel was about 19% and insurance, pension, and health costs was another 14%.

So by those figures nearly 2/3 of of the average household income, before taxes, goes for items that are not subject to sales tax.

If you assumed there was no tax at all and the entire 1/3 was subject to sales tax then that would be about $12,500. But that's likely high because of taxes and because there are still a lot of expenses not sujbect to sales tax.

It does seem likely to me that higher incomes would account for a larger relative percentage of sales tax but I couldn't find any studies. I suspect it has been studied.

[Karried]

Secondly, just speaking from personal experience, although yes taxes are a consideration when a business is looking to locate somewhere honestly it is probably way down the list at around item #10 or 11. The top factors are always going to be things like 'are there enough skilled workers in the area...' and 'where is my customer located....'

Speaking from personal experience as well.... corporations are also interested in whether or not their employees will want to move or be transferred to a city.

Quality of life, good schools, low housing costs and many entertainment options all tie in with these decisions.

Improving the Ford Center, improving our chances of becoming a Big League city will all contribute to more options, encouraging new businesses to move here.

Vote YES on March 4th!

[BDP]

One of the points being, of course, that if the "temporary" tax ends as promised, we will be at 7.38%; compare that to the list above and we're in the ballpark.

The real point is that many of those cities have other tax options AND have better, more competitive facilities than ours. At the end of the day they pay more tax as a percentage of income and have a city infrastructure more competitive than ours.

I'll help in any way I can to get it where our municipalities have more than one option for generating revenue to run and improve the community I live in, but until then I am not going to spite state law by running down a chance for the city to drastically improve its competitive stature. This seems a little foolish to me, as would comparing sales tax exclusively as a way to judge a city's affordabilty and tax structure as a whole. I mean, no one is foolish enough to look at Oregon's 0.00% sales tax and conclude that it's cheaper to live there or that they all pay less in taxes. Seriously.

[solitude]

This seems a little foolish to me, as would comparing sales tax exclusively as a way to judge a city's affordabilty and tax structure as a whole. I mean, no one is foolish enough to look at Oregon's 0.00% sales tax and conclude that it's cheaper to live there or that they all pay less in taxes. Seriously.

BDP, Just so you know, I wasn't pretending to say that sales tax rates are all that matter when it comes to affordability in living here or there. That would be ridiculous. I was stressing that so many here at OKCTalk act like that penny is no big deal. It's a very big deal. As I noted in the original post, cities battle over half-penny increases. It should not be taken as a given that sales taxes are a proper way to do certain things. I am voting yes - I think it's very important for our progress as a city. I am also saying that there need to be some drastic changes at the state and local levels in order to adequately fund things like a badly needed new police headquarters - as well as practice facilities for pro sports, if we decide that's a civic duty. (The decision - as most of you know - was made to renovate versus build the new state-of-the-art police headquarters due to 'lack of funds')

[CCOKC]

There is not doubt that the use of sales tax for municipal funding is something that needs to be looked at. If you look at the sales tax rates for some of the smaller towns in OK you find they are higher than ours here in the city when you add in the county sales tax. For example Ada's Tax Rate is 4% with a county sales tax of .6875. With the state tax of 4.5% the total tax rate is 9.1875%. If you look at the Sales tax rates for all cities in the state you find this is not unusual. If a small town has no tax base they have no funds to run their city governments. Basically, if a small town doesn't have a Wal-Mart and the town 10 miles away does you can imagine were people spend their sales tax dollars.

[BDP]

It should not be taken as a given that sales taxes are a proper way to do certain things.

Noted. Good points.