Posted on 05/08/2005 9:35:26 AM PDT by Dan from Michigan
Desperate for revenues, Detroit ponders fast-food tax 5/8/2005, 9:15 a.m. ET
By SARAH KARUSH
The Associated Press
DETROIT (AP) — Would you like fries with that? Either way, the Detroit city treasury would like a bite.
Faced with a $300 million budget hole, and with traditional revenue-raising options largely exhausted, Mayor Kwame Kilpatrick is hoping people won't mind forking over a few extra cents for their Big Macs and Whoppers.
Kilpatrick is preparing to ask Detroit voters to approve a 2 percent fast-food tax — on top of the 6 percent state sales tax already applied to restaurant meals. The mayor says consumers will barely notice the slight increase at the cash register, but critics say the tax would unfairly burden the poor and hamper economic development in the city.
Other cities and states have special taxes on prepared food, and some have tried "snack taxes" on foods such as cookies and chips. In New York, Assemblyman Felix Ortiz has proposed a 1 percent tax on junk food, video games and TV commercials to fund anti-obesity programs. But the Detroit assessment would be the country's first tax specifically targeting fast-food establishments if approved, the National Restaurant Association said.
Opponents of the Detroit idea have been quick to call it a "fat tax" — a penalty on unhealthy foods. Men's Health Magazine dubbed Detroit the nation's fattest city in 2004, though it slid to No. 3 in the 2005 rankings.
However, the tax would apply not only to fat-laden burgers, fries and desserts, but to anything sold at a fast-food establishment, even salads. City officials say the proposal, part of the draft budget Kilpatrick presented to the City Council last month, is more about Detroit's financial health than anything else.
Although the tax would not come close to fixing Detroit's financial problems — officials predict it would bring in $17 million in the next fiscal year — every dollar counts in a city already bracing for mass layoffs and service cuts.
Enacting the tax would likely require a change in state law. That could be a tough sell in the Republican-controlled Legislature, though city officials say they're confident they'll win the battle.
Kilpatrick's next hurdle would be convincing Detroit voters to give the necessary approval.
"Just tell him we're going to go to Bloomfield Hills to McDonald's if he puts a tax on it," said Ebony Ellis, 18, referring to the affluent Detroit suburb, as she and four friends ate at a Golden Arches in Detroit. The high school classmates eat at McDonald's every day after school because their schedule doesn't leave them time for lunch.
Young people and senior citizens are big consumers of fast food and would bear an unfair share of the tax's burden, some critics contend.
"It's really going to fall upon poor people harder," said Robert Wassmer, a professor of public policy and economics at California State University, Sacramento. Not only would the tax be regressive, but a lack of transportation could make it harder for some low-income residents to cross city boundaries to escape the tax, he said.
The restaurant industry says the idea is also unfair to businesses.
"We think it's extremely counterproductive to say to those people who have provided jobs, who have provided growth, `We're going to levy on you a special tax that we don't levy on anyone else,'" said Andy Deloney, public affairs director of the Michigan Restaurant Association.
But Kilpatrick insists an additional 2 percent — or a nickel on a $2.50 Big Mac — would have little effect on the pocketbooks of the average resident or the competitiveness of Detroit eateries.
"It's not really prohibitive," he said. "It doesn't overburden the family."
And the fact is there aren't many other options.
"With Detroit, you're kind of grasping at straws because the tax base is so tapped into," Wassmer said.
The city currently has five major revenue streams: state revenue sharing, an income tax, property taxes, a tax on its three casinos and a utility tax.
Michigan law limits Detroit's ability to raise income and property taxes. Few argue that such increases would help anyway: High taxes are frequently cited as a major reason residents and businesses have fled the city, further depleting the tax base.
In a study by the District of Columbia comparing Washington and the biggest cities in each state, Detroit in 2003 had the 10th-highest tax burden for a family of four with an income of $75,000. The total burden of state and local taxes combined equaled 11 percent, according to the study.
In addition to the fast-food tax, Kilpatrick also plans to ask voters to approve a property transfer tax, a flat $250 to $500 fee that would be split by the buyer and seller.
Other options, such as a municipal sales tax, might damage Detroit's efforts to revitalize itself after decades of population decline and business flight, Kilpatrick said.
The same goes for an overall meals tax not limited to fast food, Deputy Mayor Anthony Adams said. The mayor likes to boast that 22 new restaurants have opened downtown in the last three years. A tax on all restaurants might hamper this fledgling development, while the city's fast-food market is "pretty mature," Adams said.
Just how does one define the fast-food market? Besides the obvious chains like Wendy's and White Castle, officials have mentioned takeout pizza places and Detroit's ubiquitous chili dog restaurants known as Coney Islands.
But what about American Coney Island, a downtown establishment that has table service despite its simple and speedy fare? What about Starbucks or the corner deli? The administration says it is still working on a definition.
How about a tax on sneakers costing over $100 ?
How about a 2% reduction in spending. I bet even fewer folks would notice that.
Or a 2% tax increase on politicians salaries. That will convert them to Reaganomics in a hurry.
When I went to high school in Detroit (back in the days when it was a French settlement), I got 20 whole minutes to eat my lunch.
Bloomfield Hills is 20 miles away, no way they will be scooting up to Bloomfield to save a nickle or two.
""We're going to take things away from you on behalf of the common good." - Hillary Rodham Clinton June 2004"
Better think twice about super-sizing them fries.
"and you're working for no one but me" TAXMAN, the Beatles
The state is currently looking to put Detroit into receivership. There is a numbnut running for mayor who wants a law passed that would exempt Detroit from any takeovers.
Plow the whole town under ( except for the Institute of arts and stadium) and start over.
(Denny Crane: "Sometimes you can only look for answers from God and failing that... and Fox News".)
"High taxes are frequently cited as a major reason residents and businesses have fled the city, further depleting the tax base."
From their own mouths and they still want more taxes.
What a joke!
I used to work for a company that moved inmates from state to state. Michigan has a lot of inmates doing time in Virginia. We would move 4 or 5 busloads at a time from "the wall" in Jackson, MI to Reston, VA.
Michigan was short on prison bed space and the same with Wisconsin. Most folks of each state probally don't even know that their inmates are being shippied out of state.
Hmm, I wonder if Mayor Kwame Kilpatrick has considered cutting spending in order to deal with Detroit's budget problem? Oh wait, he's a Democrat, so of course he hasn't!
LOL! (That image is too funny)
10th place. Pikers. I'm sure the city government can be in 1st place without much effort.
Instead of 2%, make it 20%. That would raise ten times as much revenue. Could do as Boston is planning too, have a toll for driving into the city.
I find it amazing that most government officials have not heard of the economic term "Crowding out" - when government taxes and spends, it crowds out more efficient private economic activities, thus hindering wealth creation.
It's a simple concept. It's been proven mathematically a number of times. It's Economics 101. But no left wing politician ever wants to recognise that it's real.
Regards, Ivan
Clinton and Gore gave them the money? Out of their own pockets?
The democrat party ruling class can cut back on hookers, crack, and limousines.
(It's not really prohibitive," he said. "It doesn't overburden the family."
And the fact is there aren't many other options. )
Well at least we know what the AP thinks in this "news" story!
(It's not really prohibitive," he said. "It doesn't overburden the family."
And the fact is there aren't many other options. )
Well at least we know what the AP thinks in this "news" story!
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