urbanSTL

MattnSTL wrote:^But city residents do get a water bill. It's one flat fee based on certain factors and no meter, but there is definately a bill.

buckethead wrote:

stlpcsolutions wrote:YES EXPAND THE CITY LIMITS, PROBLEM SOLVED!

Well, since that's not going to happen there should probably be a backup plan.

JMedwick wrote:New Article in the Post about the earnings tax:

City must replace its earnings tax to survive

By David Nicklaus

ST. LOUIS POST-DISPATCH

01/24/2007



David Nicklaus

[More columns]

[David's Biography]



St. Louis' earnings tax is unpopular, and it drives both businesses and residents out of the city. But it does one thing that has made it politically irresistible: It contributes more than a third of the city's budget.



Unable to think of a better way of raising $130 million a year, St. Louis leaders have treated the earnings tax as a necessary evil. They listen sympathetically to businesspeople's complaints, and then they draw up another annual budget that depends critically on collecting 1 percent of each worker's earnings and 0.5 percent of each employer's payroll.



There is a better way to raise the money, says Joseph Haslag, a professor of economics at the University of Missouri at Columbia.



In a study being published today by the Show-Me Institute, Haslag proposes replacing the earnings tax with a new tax on the value of all land in the city.



It's not a new idea. Henry George, a social reformer in the 19th century, campaigned to replace all other taxes with a "single tax" on land.



George's idea rarely has been tried in its pure form, but Sydney, Australia, has a land tax and several Pennsylvania cities tax land more heavily than buildings.



A land tax has two big advantages: It doesn't distort economic decision-making, and it can't easily be avoided.



An income tax causes people to work less, a sales tax causes them to shop less, and the typical property tax dissuades them from building. Jobs can easily be moved to the suburbs, but land stays put.



Haslag's study recommends phasing out the earnings tax, and phasing in the land tax, over 10 years.



His model suggests a 10 percent tax on land value, in addition to the current 1.44 percent tax on land and buildings, but Haslag says a lower rate might produce enough revenue to replace the earnings tax.



Over time, Haslag says, the new tax regime would do wonders for the city's economy. The number of jobs in the city would double, and wages and property values would rise.



The study calls the land tax "a slam dunk from the perspective of city economic development."



That doesn't make it a slam dunk politically.



Retired home­owners don't pay the earnings tax, but they would pay the land tax, and retirees are a potent voting bloc. The change might require an amendment to the state constitution.



Jeff Rainford, chief of staff to Mayor Francis Slay, said the mayor "would have a lot of concern" about the proposal's effect on homeowners. But, he said, "We're very appreciative of the Show-Me Institute for doing this study. We do believe that the earnings tax creates a challenge for the city, and their study could be part of a framework for change."

Read More





Lots to like in this article, but also lots of holes in this idea.



I love (and have for some time) the idea of St. Louis altering the property tax structure to tax land higher than improvements. Any tax that reduces the attractiveness of holding onto vacant parcels is a good thing.



But, while people hate the earnings tax, I think a 11% annual tax on land values would tick people off even more. In New Jersey, the property tax is a common topic of debate largely because the property taxes are high and because they are visible. People hate getting that once a year bill showing how much taxes they owe because they own a home and how much the taxes increased over last year. The last thing the City of St. Louis needs is a more visible tax that will tick of residents of the City. St. Louis would be trading one disincentive for another.



Moreover, while the City could put such property taxes in place, don't you think that the first thing any developer will ask for when looking to build in the city is property tax relief? So how successful a revenue source will such a land tax be?



As I said though, there are good ideas to come out of the article. Sadly, it would be nice to differentially tax City and non-city residents, leaving the earnings tax in place for those who work in the City and live outside of it, combined with:



A) Savings from reduced City obligations if the City re-entered the County

B) A smaller increase in a land tax



Though, as I said before, if the City is really imaginative, it should consider doing all it can to replace the earnings tax as a general revenue source (some of the ideas above) and then dedicate the $130 million annually from the earnings tax to make major infrastructure improvements.

Downtown2007 wrote:I believe you when employers say that but I have trouble buying into the whole western movement thing in terms of choosing Clayton over DT. Its a 10 minute difference via 40 and if you factor in the amount of time it takes you to get to DT Clayton from 40 then its about even. I know thats what employees originally think but I just dont think they think it out. Plus they will probably be reconsidering when construction starts on 40.

it's doubtful that I-64 construction will play much of a part if any in bringing more businesses downtown.

publiceye wrote:

it's doubtful that I-64 construction will play much of a part if any in bringing more businesses downtown.

But, the same construction traffic delays will probably make living closer to some of the City's many employers more attractive to people who live west of Eastjesus.

bab wrote:The simple truth is that these are 'business' decisions by 'business leaders' who are just looking out for their own (inflated) pocketbooks. I, for one, do not want to see my City shoot itself in the foot as so many other municipalities are. They buy themselves current development at the expense of their futures.



I actually think that an earnings tax is much more progressive than a property tax anyday. City property taxes are low enough to not cause much alarm to elderly folks who have owned the same house in a redeveloping area for many years. The folks who make more money, pay more taxes.



Besides, property taxes are notorious for being waived/abated/TIFed/etc.



I think that a 1% earnings tax with correspondingly low (probably too low) property taxes is a plus for drawing folks to buy homes in the City. Encourage more homeowners in the City and jobs/taxes/development will follow!

One major reason keeping more residents and businesses from moving here is this backwards 1% income tax which was instituted as result of white flight.

There is nothing simple about the history of the tax.



St. Louis has had one for most of the time since 1946, when the Board of Aldermen adopted a tax of one-quarter percent of earnings of city residents and anyone else who worked in the city. And just as it is today, many people who lived elsewhere didn't like it.



Brainerd LaTourette Sr., then mayor of Richmond Heights, warned that St. Louis County residents "will not take the tax proposal sitting down." Overland Mayor Charles Moerlien said it would "stir up trouble."



Aloys Kaufmann, St. Louis' last Republican mayor, had proposed the growth-oriented tax to protect the city from chronic money troubles. He drew inspiration from Philadelphia, which in 1939 became the first city to adopt an earnings tax.



Carter Carburetor Co., then one of the city's biggest employers, challenged the tax in court. The Missouri Supreme Court threw it out in June 1947 on the ground that the city didn't have the right to impose the tax on its own.



That power, the court said, belongs to the Missouri Legislature.



Kaufmann then asked the Legislature to pass a law allowing the city to collect an earnings tax. Legislators obliged in May 1948, and the aldermen followed two months later, with a new one-half percent earnings tax.



But the state had authorized it for only two years. On April 1, 1950, it expired, and the city again stopped collecting it.



The Legislature adopted it again, and the city resumed collections in September 1951. But that levy was good only until 1954.



City officials began talking about a permanent tax. The councils of East St. Louis and Granite City protested, calling it "taxation without representation."



The big year was 1954, when the city's political, civic and religious leadership united to push for a permanent earnings tax. Civic Progress Inc., formed in 1953 by corporate chief executives, made promoting the tax its first order of business.



In a statement that would find echoes in the recent Peirce Report, the organization warned: "The city of St. Louis is the hub of the metropolitan area, and the balance of the area is dependent upon its being maintained."



At that time, Archbishop Joseph L. Ritter released a statement endorsing the earnings tax. So did the Rev. Paul Reinert, president of St. Louis University, and Ethan A.H. Shepley Sr., chancellor of Washington University. So did Jordan W. Chambers, then the 19th Ward Democratic committeeman and the dean of black politics.



Mayor Raymond Tucker said the tax could provide the city's share of the planned new expressways - the ones that eventually made it so easy to move to the suburbs.



City voters approved the permanent one-half percent earnings tax on Sept. 30, 1954, by putting it in the City Charter. The measure passed by a 6-to-1 margin.



By 1958, City Hall was lobbying the Legislature to raise the tax to its current 1 percent. In January 1959, the St. Louis County Council urged the state to limit any increase to city residents. But the Legislature went for the straight increase.



Tucker, in returning to city voters for authorization, told them that nonresidents picked up about 35 percent of the tab. Harry F. Harrington, then president of Boatmen's National Bank, said, "The earnings tax gives nonresidents an opportunity to pay their fair share of the cost of facilities they enjoy in the city."



That has always been the linchpin of the city's argument. In July 1959, city voters raised the levy to 1 percent.



One year later, the earnings tax passed the property tax as the top source of city revenue. Today, it brings in more than three times the property tax. Nothing much else has changed, except that nonresidents now carry more of the load.



The earnings tax made news in July 1966, when singers Andy Williams and Henry Mancini were the first traveling entertainers to agree to pay it. One month later, the Beatles' show at Busch Stadium ponied up.

bonwich wrote:

One major reason keeping more residents and businesses from moving here is this backwards 1% income tax which was instituted as result of white flight.

Yes. Yes of course. "White flight" was such a huge issue in the '40s and '50s.



Or for another view, let's look at a Post-Dispatch article from about 10 years ago.

bonwich wrote:St. Louis City population

1940 816048

city institutes earnings tax in 1946

1950 856796

city makes earnings tax permanent in 1954

1960 750026

1970 622236

1980 452801

1990 396685



Now, perhaps you believe that the Great White Fathers were enormously prescient and actually predicted that the City would lose more than half of its population in the 50 years following the time that they implemented the tax. Wow! They sure were visionary back then! I guess all those guys then moved away (due no doubt to "white flight") and left us with the lesser lights who have guided the City since (with all due respect to the current administration).



Oh, and watch it about quoting Wikipedia. They'll cite just about anybodyas an "expert."

Doug wrote:Instead of removing the tax, cut it in half.