St. Louis has no plan if 1% earnings tax is eliminated
St. Louis Budget Director Paul Payne faced a barrage of questions from Missouri House members over the city’s earnings tax on Monday.
St. Louis currently does not have an alternative revenue plan in place if residents ever vote down the city’s 1% earnings tax.
Testifying on Monday in St. Louis before a Missouri House committee examining the earning tax, city Budget Director Paul Payne said there is not a Plan B if voters decided not to retain the tax.
“If there was, you'd end up seeing the usual suspects of, ‘Well, what if we increase the sales tax similar to this and what would that be or what would be the impact on the property tax?’” Payne said. “But there is no current scenario which says our earnings tax goes away and this is what we do.”
Since 2010, voters in St. Louis have approved the earnings tax three times. During the last vote in 2021, the tax was reapproved by 79% of voters.
The next retention vote will be in 2026.
Payne was one of several people to provide testimony at the afternoon meeting, which at one point had roughly 30 attendees.
Payne said the earnings tax makes up 37% of the city’s total general revenue fund. He said 79% of the earnings tax revenue comes from individuals, while 21% comes from corporations.
Rep. Ben Keathley, R-Chesterfield, said having his business in St. Louis County instead of the city gives him a “1% raise automatically.”
He said there needs to be an answer to whether the people paying the tax are the same ones who voted to approve it.
“Until I see those numbers that the overwhelming majority of people who we’re collecting the money from are the ones who are approving the tax year after year after year, this just doesn't mean anything to me,” Keathley said.
Payne said of the earnings tax that is collected from workers, probably two-thirds comes from non-city residents.
Rep. Steve Butz, D-St. Louis, said that no one tax is popular and that he likes a “broad-brush” approach to the city’s taxes to include several types, such as earnings, income and property.
He also said crime is a bigger reason people are leaving St. Louis.
“You just ask people why they left the city, paying the earnings tax simply never comes up anecdotally, compared to crime and then schools,” Butz said.
The committee, chaired by Rep. Jim Murphy, R-St. Louis County, is set to meet again in Kansas City, which also has an earnings tax, on Nov. 7.
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