Testimony on the Earnings Tax

This is what I have told the General Assembly today:

I agree with the conclusion that the City’s earnings tax, a one percent local tax levied on those who live or work in the City, is a disincentive to some residents and businesses.

Nevertheless, everyone who pays the earnings tax benefits from the services provided by the City.

The City of St. Louis collects the earnings tax to recognize several important realities:

First, a city not within a county, with a small area, without the current ability to annex its neighbors, cannot pay for its public safety costs and infrastructure by relying on existing property and sales taxes. Our rates are already at the limits this General Assembly has set. Eliminating the revenue generated by the earnings tax would cost us the equivalent of our police department and much more.

Second, beyond the reality imposed by capped tax rates, the historic segregation of the poor, young, and old in the City places extraordinary responsibilities and burdens on our government. Many actions taken by the General Assembly, including its unwillingness to expand Medicaid or fully fund education, or to invest fully in jobs training, and passing irresponsible gun laws, have increased those burdens.

Third, as a city not within a county, the City of St. Louis has financial responsibilities that other cities do not have. We fund the Circuit Attorney's Office; the State Courts including the Judges and Court Clerk's office; the Sheriff's office; the Board of Elections; and we house state prisoners.

Of course, the General Assembly could fix this.

Allow us to expand the City limits and tax base to I-270, and the urgent need for the earnings tax would disappear. Conversely, replace the local costs of social services and other traditional county functions with state funding, and the urgent need for the earnings tax would disappear.

Barring these common sense, but unlikely, events, I remain committed to work with you and with regional officials to re-examine every current and potential other source of revenue. But, I must also respectfully request that you leave the authority to impose a local earnings taxin place and leave its continuation subject to the local control voters statewide have imposed on it.