Yes More Taxes?

None of us like to pay taxes.  For the last several decades those of us who live and/or work in the City of St. Louis have been required to forfeit an additional 1% of our federally-declared income to City Government.  In April 2011 this may change, thanks to the passage of a ballot initiative last year, which made such earnings taxes illegal in the State of Missouri and requires those few places where they do exist to place their continuance on the ballot every five years.

What are the chances of St Louis voters deciding to continue this tax in the current economic climate?  What would be the effect of the earnings tax being eliminated?  The Mayor and an increasing number of Aldermen are saying “Disastrous!” and are raising money to fund a campaign against the elimination of the earnings tax.

The earnings tax forms a significant part of the City budget and its elimination would necessitate both the need to identify alternative taxes and to implement cuts.  Those supporting the elimination of the earnings tax argue that both would be a good thing, City Hall is undoubtedly an inefficient and wasteful place but who’s to say that the elimination of this source of revenue would lead to the most appropriate cuts and increases in efficiency?  Favorite among alternative taxes appear to be those on property, but increases in property taxes would further stagnate a hesitant recovery in development and improvement.  Increases in sales taxes would simply drive shoppers to very close by and viable alternatives in the County.  Cuts would allegedly be deep and substantial, possibly compromising the safety of citizens and reducing to a minimum many services currently regarded as essential.

Which way to vote?  In favor to continue the status quo and hope that other mechanisms will lead to increases inefficiency and the elimination of waste at City Hall or against for the short-term savings in tax expenditure and the risk of kicking-off  a decline equal to  white flight in the ‘60’s?

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9 Responses to Yes More Taxes?

  1. Delia says:

    This tax should have NEVER been up for a state vote in my opinion. There is no way a predominantly rural state constituency can gauge and cast votes on an issue that so minimally affects them and so greatly affect urban residents.

    When dealing with this issue I think it is important for local government to find a way to galvanize the general public. People often do not see the overall importance to paying taxes, especially in this economy. I remember the late 90’s when downtown St. Louis looked run down and I fear it will look that way again if the city loses this tax. This earnings tax funds many of the public utilities and services crucial to the successful revitalization of the city.

  2. Matt Hawkins says:

    Let me start by saying that I am a big fan of cutting taxes of all sorts…The Laffer Curve proves that at some point, tax rates can begin to shrink economies. For me this is an important concept because we have to imagine a “normal”–performs at potential, a “hyper-normal”–performs above potential, and a “sub-normal” economy–performs below potential.

    The question of what happens when taxes go away is pretty clear…communities grow and prosper. The propoganda used by those who benefit, directly or indirectly, like paid elected leaders and their legions of paid staff is purely emotional. Besides, fear can never be reason to make mature decisions in a civil society.

    Those who support the City Tax for St. Louis must also fear growth because I am betting on more growth not the desolation of the early ’90’s…that occured by the way with the City Tax in place, right?

    • Delia M says:

      Matt, that is a double edged sword is it not? Indeed there was desolation when the city tax was in place but there was also substantial growth with it in place (directly and indirectly because of it). This is what we do know…what we do not know is what will come out of removing this tax. The city of STL (don’t know much about KC other than great Mexican food and BBQ) can’t stand to lose a revenue stream when we are dealing with these incredible issues, like our excessively high crime rate and poor performing school district among other things. Sure the city has other funding sources but honestly we need them all. Personally I think STL city and county should merge and pull resources (but I know that will never happen).

      • Matt Hawkins says:

        Delia, that makes the City Earnings Tax a moot point as it relates to development or desolation, right??? Like the pooling resources comment except for the prediction about what will be true at some point in the future. I think that the future is unknown and that this might be that economic environment that makes the improbable more probable…High crime is more about occupancy or unoccupancy than money for police, or per capita polie rates, according to my research. Poor performing district is about a failed, outdated curiculum and unionization for me.

        When times are tough, people get creative. When times are good, people party and act like unresponsive fools…now is the time to propose new, creative policies for getting old issues done!!!!

        • Delia M says:

          Does not matter what causes crime in regards to this topic but rather how crime is addressed and doing away with the city earnings tax is a direct correlation if you ask me. This tax pays for general city services including salaries for city employees like fire, and police. In an STL American article I read a while back Mayor Slay talked about cutting 170 some odd jobs including city jail officers, and community officers…that is a problem. This WILL contribute to the crime rate because it is a chink in our city’s ability to fight crime. Now let me bring this full circle…the city’s inability to handle crime can very well dissuade new development and run people away from the city…which in turn will greatly contribute to the deterioration of the city. Doing away with this revenue stream will also potentially increase the city’s unemployment rate or on the other side of that…increase fees for public services to compensate for the loss…either way the citizens lose.

        • Delia M says:

          no moot points there buddy 😉

  3. Linda says:

    If the tax is lost, local government has many many ways to still make ends meet. The tax comprises about 14% of the funding for the city. A good chunk; but not an end all amount either. The difference will be in how the community either pulls together or divides itself; and that is a function of the residents and community leaders who are not a part of the formal local government. I looked at their budget for about 15 minutes and found ways to cut millions, not the 141 million, but if it took me only 15 minutes to find a few, certainly the local government will be able to figure out a few more things than I did when they have to.

    I don’t live in the city, but I do know people who are already looking to leave because of the tax. They can move a short distance away, still have access to everything, and not have the cost (even figuring in gas expenses and wear and tear on their vehicles). I think the city may be risking the loss of their middle income people anyway, just based on my personal experiences.

    • Delia M says:

      I believe the tax accounts for around 30% percent of the budget which is way more substantial (I will not speak more to this point because I am sure the author will speak more in detail about it). I also feel the city is losing its middle class for reasons far out weighing the taxes. I think the city might be losing middle class residents because of the horrible schools and crime rates more so than taxes. I also am not sure how managing a city budget worth millions of dollars can be done in 15 mins of observation.

  4. Hugh Pavitt says:

    Delia’s right, according to the State Auditor, its about one third of revenue, or close to the amount spent on public safety, according to the Mayor.
    The bringing of our attention to this issue raises a great many questions: From: “To what extent should non-city voters get to change the course of events?”, to “How best to protect the undoubted strides the City has made in the last decade?”, to “How else can this money be raised?” Detractors seem to be suggesting that the shortfall can be covered both by increases in (property-sales) taxes and by cuts in “wasteful” city services.
    Given the amount of money that has been spent to get this issue on the ballot, one wonders to what better end could those resources have been put? Reforming the school district and reforming the localized alder-manic form of government come to mind for starters…