Governments levy taxes where they have a comparative taxing advantage. i.e. On items, income or purchases where it is difficult to avoid the taxes.

Suppose the City of Ames levied a 10 % individual income tax on everyone living in Ames. What would happen ?

People would move outside of the city limits.Home prices would fall.The surrounding communities would grow. Ames would not.

Ames has a 1 % local option sales tax. As a result, persons purchasing large ticket items are more likely to buy these items outside of Ames. The tax is fairly effective in collecting some additional income from ISU students.