Finding a Connection Between Crime and Taxes

The complex interplay between sales taxes, crime rates, education, and quality of life drives a staggering amount of local politics, especially in states like Washington where no income tax is collected.

Counties often rely on Special Purpose Local Option Sales Taxes (SPLOST) to fund their crime suppression measures, which creates an interesting situation in which funds for those programs are dependent on the strength of the local economy, and the strength of the local economy is typically impacted by crime.

Associate Professor of Accounting Fabio Ambrosio recently published research into this phenomenon, using a holistic view of this cycle.

“The issue with tax revenue and crime rates is that they’re both effects, not causes,” said Ambrosio, who is based at CWU-Des Moines. “We can’t just assume that there’s a connection between tax revenue and crime rates, because we have to separately study what drives tax revenue and what drives crime rates, and whether we can really close the circle by throwing tax dollars at crime suppression measures.”

One of the issues facing this approach is whether crime suppression programs like more jails, judges, and police officers actually reduce crime levels.

“If you’re trying to stop people from stealing, rather than arresting them faster, prosecuting them better, and putting more people in jail, maybe you should try to understand why these people are stealing, and that’s what this research has been about,” Ambrosio said. “Instead of throwing tax dollars at crime suppression measures, we should invest tax dollars into preventing and avoiding what drives people to commit crimes in the first place.”

According to Ambrosio’s research, reliance on SPLOSTs is actively removing funding from the communities that need it most. Since sales tax revenue increases when people have more money to spend and crime rates increase with higher poverty rates, revenue ends up flowing into counties with more market dominance and less need for crime suppression.

“The sales tax is flowing in the opposite direction of where the need is,” he said. “The money is flowing into these market-dominant counties that also happen to be the counties that need the money the least.”

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