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Argues Republicans fail to account for huge cuts to city services that would result
JEFFERSON CITY, Mo. — State Rep. Steve Butz, D-St. Louis, has authored a comprehensive Democratic response to the report issued by the House Special Interim Committee on the Earnings Tax.
Butz served as the ranking member of the minority caucus on the committee and submitted a minority view to incorporate into the committee’s final report to House Speaker Dean Plocher, as guaranteed by House Rule 34, that disagrees with some of the primary assessments of the majority while also acknowledging areas of agreement. None of the three Democratic members of the committee — Butz; state Rep. Marlon Anderson, D-St. Louis; and state Rep. Maggie Nurrenbern, D-Kansas City — signed the majority report.
The main finding of that report was a gradual but complete elimination of St. Louis and Kansas City’s earnings taxes. The report offered no recommendation for replacing the revenue that would be lost as a result.
“The earnings tax comprises the single largest portion of revenue in each of Missouri’s two largest cities and economic drivers. Failing to propose a plan to cover that lost revenue is fiscally reckless and irresponsible,” Butz said. “St. Louis and Kansas City need that revenue to continue providing essential services for their citizens and the millions of visitors that travel to those cities from all over the world.”
St. Louis and Kansas City each levy a 1 percent earnings tax on all people who live and work within their city limits, a relatively low rate compared to other major Midwestern municipalities that levy a similar earnings or income taxes, including Pittsburgh, Detroit, Cleveland, Indianapolis and Louisville.
The St. Louis and Kansas City earnings tax make up roughly 41 percent (about $219 million) and 45 percent (about $292 million) of their respective cities’ general fund revenues. Because these taxes contribute so much revenue to city coffers, eliminating them entirely would result in across-the-board cuts to police and fire services, education, health care, city courts, parks and forestry, city libraries, tourism and much more.
Butz also pushed back on the majority report’s rationale for eliminating the earnings tax, which argued the earnings tax is the cause of population loss in St. Louis. He noted that Kansas City has experienced record population growth in recent years with the same earnings tax rate and that expert witness testimony argued more convincingly that St. Louis’ has lost population since the 1950s due to myriad other reasons unrelated to the earnings tax.
However, Democrats agreed with some recommendations from the majority. One such proposal included pursuing a more progressive tax scheme to benefit those living near or below the federal poverty line, and another included the creation of business enterprise zones in federally recognized “distressed communities.”
“I believe we can find some common ground with our Republican colleagues on a few of the less inflammatory and dramatic recommendations, and we should work to make this system more equitable and progressive,” Anderson said.
Nurrenbern added that one of the most convincing reasons to keep the earnings tax is also one of the simplest: it’s overwhelmingly popular. In 2021, just under 79.5 percent of St. Louis City voters approved a ballot measure to renew their earnings tax, and just over 77 percent of Kansas City voters did the same.
“The vast majority of St. Louis City and Kansas City residents support the earnings tax, and they have proven it time and again at the ballot box,” Nurrenbern said. “Contrary to what Republicans in Jefferson City believe, the people who live in Missouri’s two largest cities are more than capable of governing themselves.”
A full copy House Democrats’ minority view can be read here.
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