Cutting the city's earnings tax: Will it drum up business or chop services? You decide. - KMOV.com

Cutting the city's earnings tax: Will it drum up business or chop services? You decide.

(KMOV) -- All of the services city residents have come to expect -- from street maintenance to crime fighting -- could be on the line.

 

There's an effort to do away with the city's earnings tax, and all Missourians can vote on it this November.

News 4 is watching out for your money and talking to people on both sides of the issue.

We're talking about Proposition A. This November voters won't actually decide whether to keep or cut the earnings tax, but they will decide whether it should make the April ballot. Some city leaders don't think it should even get that far.

Small business owner Chris Sommers opened a pizza shop in the Central West End, followed by three more outside the city. St. Louis takes one-percent of his earnings, but he's O.K. with it.

"We just kind of consider it the cost of doing business," Sommers, the owner of Pi restaurants, says. "We have world-class venues and amenities but a very small tax base."

And that small tax base funds one-third of the city's budget. Supporters of the initiative to do away with the earnings tax say it's bad for business -- that it makes it hard to entice new development. But new jobs are moving downtown, despite the tax. Sandwich maker Landshire will open its headquarters here and bring on 40 employees, and I.T. company Unisys will open a center filled with 300 employees.

"We base our decisions about where to locate those centers on many factors, including the quality of the local workforce, proximity to university talent, the cost of doing business in the region, and the amount of work and business relationships we already have in the area," Unisys C.E.O. Ed Coleman has said.

Those employees will earn a median income of $55,000. The city will tax their earnings $550 a year.

"That translates into rent, or maybe a couple of car payments; it could even be a mortgage for some folks," Anne Marie Moy, spokesperson for "Let Voters Decide" says.

But city Comptroller Darlene Green says public safety, fire fighters, city services like pot-hole repairs, and our free zoo could face drastic cuts without the earnings tax revenue.

"You would have to find a way to replace the earnings tax, and right now there's no good way unless we were to quadruple property taxes or triple sales taxes," Green says.

This November voters across Missouri will decide whether the state's two biggest cities can decide whether to keep or cut the tax.

"St. Louis and Kansas City are the economic engines for entire state, so what happens here effects everyone," Moy says.

If the vote passes, it will do three things: give St. Louis and Kansas City voters the right to decide, keep other cities from imposing an earnings tax, and make the tax decision renewable every five years.

If the vote passes the November ballot and the St. Louis and Kansas City voters decide in April to jettison the tax, it will be phased out over the next 10 years.

Maggie is a reporter at News 4.  To contact her, email mcrane@kmov.com

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