I went to the Southampton Neighborhood Association meeting last night and Mayor Slay was there talking about Local Police Control, the Census, and some other other things. But he talked about the Earnings Tax a great deal and shed some light on the situation.

This is a incredibly important proposition for the City of St. Louis. If it doesn't pass, the city will lose approximately $14 million every year for ten years. The Mayor said the city currently is running at a deficit. City employees (minus police and some others) have taken 2-week furloughs over the past two years to get the budget even.

The Mayor brought up some interesting points (some good, some bad)
-The tax is only paid by individuals who work in the city and have an income.
-The majority of the tax is paid by those who live in the county or Illinois who work in the city. Includes everyone such as athletes, CEO's, etc.
-Businesses pay a payroll tax (I think its .5%) and not an earnings tax. The earnings tax is strictly taken out of people's paychecks who work in the city.
-He believes the tax is a competitive obstacle but not as drastic of one as many publicize

I'd like to see the tax go, but I don't think the city is ready yet. The tax base from which it is generated would change from a region spanning multiple counties to only the City. They city can't handle that much increase that quickly. I think it would only force more people to leave the city, and any progress that we're making now would come to a halt.

What do you think? Do you think the city should keep it? Do you think it will pass?

http://www.citizensforastrongerstlouis.com/

I still do not understand where the authority rests for putting this on the ballot. I think Sinquefeld has another legal maneuver up his sleeve.

The state law that was passed in November is where the authority comes from. The law eliminated any further use of the Earnings Tax in the state and any city that currently has an earnings tax has to vote on it every five years. Our first initial vote for it is in April. If it passes, we'll have another vote five years from now. State law supersedes city/county law.

"The tax is only paid by individuals who work in the city and have an income."

Not quite true...it's also paid by folks who work 'outside' of the city if they reside in the city.

"The tax base from which it is generated would change from a region spanning multiple counties to only the City."

Well, here's an idea. Let's tax everyone that works in the city the 1%, but exempt city residents. (Or cut city residents tax to .5% like employers.) This would 1) incent people to move to the city and 2) enrage the county residents enough that it might be enough to convince them to merge with the city and scrap the whole thing.

Well, here's an idea. Let's tax everyone that works in the city the 1%, but exempt city residents. (Or cut city residents tax to .5% like employers.) This would 1) incent people to move to the city and 2) enrage the county residents enough that it might be enough to convince them to merge with the city and scrap the whole thing.

I don't see how you can justify taxing people in the county more than those in the city when the tax pays for services that people in the city use more of. There's a lack of integrity in that idea.

thought that was rather valid and really don't know how the city can legally tax income on non-residents.

I can see the justification in the fact that people who work in city do use some city's services...Police and other safety departments.

I would argue that the earnings tax should be there to a degree but less so for non-residents of the city. .5% for non, 1% for residents. But that wouldn't help our competitive situation

It's not much different than the city giving tax breaks to companies to stay or move to the city. They'd be giving tax breaks to people to stay or move to the city. The census might look better in 2020.

iggy wrote:"The tax is only paid by individuals who work in the city and have an income."

Not quite true...it's also paid by folks who work 'outside' of the city if they reside in the city.

"The tax base from which it is generated would change from a region spanning multiple counties to only the City."

Well, here's an idea. Let's tax everyone that works in the city the 1%, but exempt city residents. (Or cut city residents tax to .5% like employers.) This would 1) incent people to move to the city and 2) enrage the county residents enough that it might be enough to convince them to merge with the city and scrap the whole thing.

^This. I've lived in the city for years, but work in sales in other states, but i'm still paying city earnings tax because my residence is in the city, and that is extremely annoying. I live in the city, I patronize city businesses, goods and services- that's enough. Go figure, the mayor doesn't even understand the tax with that statement.

I asked Jeff Rainford last night how much the City's county-types services cost. He said $40M which doesn't cover the whole of the revenue from the earnings tax. I said that I wanted to be able to sell to Countians that reentry will make it more likely that the City would get rid of the earnings tax, but that won't work if it's ~25% of the total revenues from it. Without asking specifically he said the $40M does cover that paid by City residents and maybe we should consider removing it for them as an incentive for living in the City. Afterwards I realized that that would be a great incentive post reentry to be annexed into the City.

For future reference, don't ask Rainford about anything if you're actually trying to get the correct information.

"The state law that was passed in November is where the authority comes from."

The law itself that was passed grants no such authority. It explicit allows for the situation where the city cannot or does not place the question on the ballot, rather than mandating that the question be placed on the ballot.

shadrach wrote:Years ago I worked downtown, a co-worker lived in South County and said his argument against the earnings tax was "taxation without representation."

I thought that was rather valid and really don't know how the city can legally tax income on non-residents.

Because the E tax is enabled by state statute, all payers that live in Missouri do have representation. Not true for Illinois residents, but if you shop anywhere outside of where you vote, you don't necessarily have representation for the sales tax, or on property you may own outside of where you vote.

^ There's nothing in our constitution that says, "No taxation without representation."

MattnSTL wrote:
Because the E tax is enabled by state statute, all payers that live in Missouri do have representation. Not true for Illinois residents, but if you shop anywhere outside of where you vote, you don't necessarily have representation for the sales tax, or on property you may own outside of where you vote.

That's the exact argument I've made. Most city people do their shopping in the county malls. That sales tax money doesn't make it's way to the city, so should everyone be exempt from paying sales tax if they shop outside of where they reside?

One key to understanding the significance of the earnings tax, is to first acknowledge that the actual city of St Louis is faced with an ever-diminishing tax base from which it can actually pull.

In 1950 for example, almost 50% of the city's total revenues came from the property tax. However, decade after decade of exodus, combined with diminishing property values, the controversial "blighting" of neighborhoods throughout the city, and ever-increasing use of tax-exemptions as urban redevelopment incentive, has resulted in property tax revenues stabilizing at around 10% of the city's total revenues since 1980.

The property tax, as well as additional tax-revenue flight to the suburbs, has left a pretty significant gap in what the city actually needs to function, much less redevelop, and thus the earnings tax was created out of necessity.

This isn't as much the story of St Louis City trying to get extra money from suburban-commuters as much as it is one of the people of St Louis abandoning the city over the course of the last 60 years, and moving to increasingly segregated, suburban developments, subject to the taxes of fragmented municipalities.

In the words of Mapping Decline author Colin Gordon:
"This, in St Louis and elsewhere, was the lasting legacy of fragmented metropolitan governance. Successive rings of suburban development poached the central City - and later the inner ring suburbs as well - of their population, their wealth, and their taxable value."

One thing St Louisans across the metro-area are going to have to come to grips with, is that if they ever want an actual resurgence in the City of St Louis, both residentially and commercially, there has to be a more organized effort between local governances in working together to manage the metro-area as a whole.

The idea of "blighting" malls in West County, for example, for the purpose of using Tax Increment Financing for a new Nordstrom is both absurd, and a true indicator of where we stand as a metropolitan-area whose City center can barely keep it's head above water. And until we take action to address something as detrimental as "home rule" governance for the vast expansion of municipalities still going on today, the attempted regrowth of the City will always continue to be in competition with the outward expansion of persons, finances, and resources. Looking at you St Charles County.

In other words, the earnings tax is of paramount importance to the functioning of the City; if that is what people still hope to have in 10 years. If not, by all means, vote against the earning tax in April.

shadrach wrote:
I'm not against non-residents paying an earnings tax since the city is utilized for so much of the metro area. Example: how many non-residents attend Mardi Gras and St. Pat's day Parade putting a financial strain on City's infrastructure and law enforcement and public safety? Not to mention sporting events and other festivals.

Yes and no, sporting events have events tax on top of sales tax as well as non-residents generating revenues from parking to buying a hot dog at the stadium. So its a wash and poor argument when a county resident might want to have the Rams move out of the city so they don't have to take their money into the city in the first place. Second, downtown businesses will see revenues and thus the city will see sales tax revenues after a St. Pats Parade or Madri Gras. The businesses in turn pay property taxes. So once again, the argument of straining city services is a wash and not a very good one in my opinion. Worse yet, in time people vote with their feet. Tell them they are not paying enough at the next big festival and the following year they might go somewhere else. The city loses, businesses lose and residents lose in the end.

The argument of earnings tax missing a much bigger concern for the city and thus the region. How do you grow the city population and thus the region's population at much stronger rate because the city's infrastructure is meant for many more people? If you can't grow the population, how do you downsize your infrastructure and services to maintain a quality of life? Which goes to the heart of the most recent NextSTL post about vacant property. Vacant property is sucking the life out of St. Louis. In the meantime, earnings tax has simiply bought time

The city should focus on reducing the burden on taxpayers and businesses and encourage them to relocate to the city rather than the county. The income tax is about the worst kind of tax there is... a tax on productivity. The mayor has no idea what he's talking about when he refers to the impact. There's a reason jobs have been relocating in mass exodus to areas like Clayton.

Additionally there is lots of fat to cut in the city budget... for instance they are still wasting tax payer money tearing down buildings and replacing them with unneeded parking garages. The city should not be in the parking business, that's for the private sector. They should only be providing the bare minimum essential government services such as zoning, police, fire, etc.

"They should only be providing the bare minimum essential government services such as zoning, police, fire, etc."
The problem with that argument, is that providing bare minimum essential government assumes that a different layer of government assumes those services.
Minimum federal government requires State and local to take up the slack.
Minimum State government requires County and City to take up the slack.
Minimum County requires City to take up the slack.

Now, federal is basically the same everywhere. Especially where St Louis City is concerned, Missouri is definitely bare minimum State government; which has carried over to St Louis Public Schools (which, ironically, costs a fortune despite being bare minimum services). So, with no County government, that leaves the City of St Louis to take up provisioning all the services that would be covered by a stronger State, County, or School District government in other areas.
Now, the step you argued is privatization, which is effective in a strong and stabilized economy, especially a manufacturing based economy. St Louis City is none of these right now. It is heavily service based, in significant flux, and is not strong in the provision of local services and support. The private sector is not equipped, and has little incentive, to fill in for government services gaps in St Louis. Instead, the only options for privatization are direct privatization of government services (tax paid, private provided), which does little to nothing for budget cutting and instead would increase St Louis City's corruption problem.

I'm a bit surprised that this isn't a more active topic. Not sure how many voters are expected, but as of now, KSDK.com is showing a "Yes(keep it)" vote of 84%, though that's only 1775 votes. I've read an expected turnout of 10-15%, so whats in terms of votes? 8-10,000?

Thoughts? (please read)


http://blogs.the-american-interest.com/ ... in-droves/