Flip the Thinking – Can Lowering Taxes Help a City

Over the holidays, my wife and I visited family.  We have family outside of St. Louis, MO.  On our drive through St. Louis we talked about how the quality of living and the safety of the city has dropped.  St. Louis is now #1 on the most dangerous place to live in the U.S. list.  Houses are dilapidated, streets are run down, and manufacturing jobs are leaving at a rapid rate.  Nine years ago we wanted to move to St. Louis to be near family.  Now we don’t.  The city doesn’t present many opportunities or at least not as many as it used to.  Throw in the crime rate and it isn’t appealing.

What amazes me is the cost of living for St. Louis and the surrounding areas.  It is expensive compared to where we live (Kansas City, KS) and used to live (Indiana and Texas).  The cities we have lived in have been very nice.  They have their run down parts but there aren’t as many as in St. Louis.  We discussed how downtown St. Louis (as other cities I’m sure) raise taxes in order to get the lower income to move out and create revitalization.  Raising taxes to force out low income means those with low income get hit harder and are forced to stretch their means further.  Moving isn’t cheap either, so how can low income families (bordering on poverty) even afford to move out.  This could lead to more crime as people take drastic action to help feed and provide shelter for their families.  I know the city gets more revenue or at least they perceive they do. If people can’t pay it, then the city really doesn’t get the money.

In lean, we want people to flip some of their thinking.  “Don’t think in silos, think flow,” or “Don’t look at the price per piece, look at the total cost.”

What if a city flipped their thinking about raising taxes to revitalize the city.  Instead of raising taxes, the city lowers taxes.  People would get to keep more of their pay check which means possibly spending more in the local shops or being up-to-date on bills and not feeling stressed about what to do this month or keep their house in good shape.  The city would actually get the money and be able to reinvest in the city’s infrastructure.  This reinvestment could then attract more people and business because it is nicer plus the cost of living isn’t as high as surrounding areas.

I am no political or economic expert and I will never claim to be.  These are ares of little interest to me.  I know none of what I proposed has been proven.  It may or may not work, but isn’t it worth a shot after many years of a city eroding?  Isn’t it worth trying something new?  It isn’t a short-term strategy, which people love to see results now, but a long-term strategy that takes time.

What if a city flipped it’s thinking?

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Posted on January 12, 2011, in Flip The Thinking, Government, Misc, People and tagged , , . Bookmark the permalink. 2 Comments.

  1. As you know, cities offer tax breaks and revitalization zones to attract companies to locate there. Then neighborhoods are neglected. We saw this in Detroit starting in the 1970s and now the city is talking about shrinking its boundaries and totally abandoning those devastated areas, making residents move to the remaining areas it will serve. Not only are taxes high in many cities, but delivery of services can be poor.

  2. St. Louis and Detroit are interesting examples. I was unaware of the tax strategy and always assumed the tax hikes was just more of the short sited tax more and spend more mentality. Reagonomics proved in a very difficult time (worse than anything we have seen since) that lowering taxes and trimming the government will strengthen the economy and increase tax revenue. Too bad so many leaders in Washington and locally don’t get it.

    Thanks,
    Chris

    A post on President Reagon’s leadership: http://wp.me/pZiRD-dF

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