KC and STL mayors battle earnings tax repeal

  

JEFFERSON CITY, Mo. – Democrats on the House Emerging Issues Committee, as well as Democratic mayors Sly James of Kansas City and Francis Slay of St. Louis, relentlessly attacked the notion that the earnings tax was unfair and unconstitutional in a hearing Wednesday evening.

The hearing went well past 9 p.m. with Chairman Elijah Haahr suspending time limits for the two mayors to state their case and for the representatives offering the legislation to explain why they found it harmful. Speaker Todd Richardson, R-Poplar Bluff, sat in for the first part of the hearing, and Minority Leader Jacob Hummel, D-St. Louis, who is not a member of the committee, asked many questions throughout the evening.

Reps. Kirk Mathews, R-Pacific, Shamed Dogan, R-Ballwin, and Keith English, I-Florissant, each took turns presenting their bills in succession. Mathews said the tax was a burden on growth in St. Louis.

“This tax is clearly a disincentive to live in the city, to work in the city, to start a business in the city or to relocate a business in the city,” he said. “Just last week, in a letter to the editor to the Post-Dispatch, the mayor of Belleville was attempting to persuade the NGA by promoting the one percent raise they would get in Illinois.”

Dogan argued the implementation of the tax was arbitrary and unfair, saying that only some had to actually pay the earnings tax.

“When you have a tax like this that is regressive in nature at the same rate is paid at the same rate at the bottom of the economic spectrum and at the top rate of the economic spectrum,” he said. “When the little guy has no way of getting an exemption, but the well connected and the wealthy can get an exemption, I have a problem with that.”

English said he respected what the tax did, the services it provided, and supported paying it, but he also had fears about the constitutionality of the tax. The constitutionality has come under question since the Maryland Comptroller v. Wynne Supreme Court case was decided since last year.

Rep. Mike Colona, D-St. Louis, was visibly upset during their presentation.

“I don’t get it I simply don’t get it,” he said. “If you all had a solution or even suggestions for a solution, then that starts the conversation. But if I was to come into Ellisville or Eureka, and said, what you’re doing I don’t like, I don’t like your taxation structure, I hope I’d have been courteous enough to offer a solution.”

DOGAN PHOTO/TIM BOMMEL - MISSOURI HOUSE OF REPRESENTATIVES
Dogan (Courtesy of Tim Bommel – Missouri House of Representatives)

Dogan and Hummel also got into a spat with Hummel alleging that any tax paid in a community outside one’s residence was a tax not voted on by the person visiting, countering one of Dogan’s primary contentions.

But the real hearing did not start until testimony began. Stephanie Lewis, a member of a PR firm hired by the Vote No on the E-tax Committee which was given over $600,000 by Rex Sinquefield Wednesday, was the only person to testify in favor of the bill. She also had a camera rolling on her, a fact which annoyed Rep. Jeremy LaFaver, D-Kansas City.

“You’re here to film the campaign commercial,” LaFaver said. “You’re mic’d up. It’s borderline offensive. It’s Ron Calzone-level.”

Lewis reiterated many of the points the representatives did and argued the tax hurt the working poor the most.

“We believe the earnings tax directly hurts the working poor by taking money out of their pockets,” she said. “The average person making $30,000 a year really can’t afford a one percent income tax.”

Lewis, who also represented herself as a citizen of St. Louis, added average citizens did not have an outlet to express their displeasure with that law, even though citizens in Kansas City and St. Louis must renew the earnings tax every five years by vote. She argued citizens did not understand the issue well enough.

Only Rep. Gary Cross, R-Lee’s Summitt, seemed receptive to Lewis’ arguments. Hummel noted that St. Louis and Kansas City had voted overwhelmingly in favor to keep the tax in 2011, and that Lewis herself, who admitted to moving back to the city just a year ago, had willingly come back knowing she would have to pay the earnings tax.

Hummel also got her to say she had not attempted to meet with any city officials to discuss her problems with the earnings tax.

James
James

Mayor James then took the stand and lambasted what he saw as a moneyed effort to overthrow local control.

“Why are you jacking with us when you don’t need to?” James said “I’m not asking you for any money. I’m asking you to do what you said we could do. Local residents did decide by 78 percent this was a tax that we wanted.

“The facts are very simple. Fifty percent of the earnings tax is paid by people that don’t live there, but they work there. Every suburb is a suburb of somewhere. We’re the somewhere. We’re the hub. We provide the amenities that the entire region taxes advantage of.”

James also combatted the unconstitutionality argument with a legal opinion from Husch-Blackwell to say everything about the Kansas City tax policy was in accordance with the Wynne decision because they gave out returns to avoid double taxation. He also said that eliminating the earnings tax would effectively eliminate around 40 percent of the city’s revenue and cause massive cuts across the board and a redistribution of taxes in an attempt to make up the difference.

He also echoed Colona’s biggest concern.

“Nobody who’s brought up any of these bills has offered a single, solitary solution,” he said.

Even though Kansas City was cut out of an earnings tax repeal bill from Sen. Kurt Schaefer, R-Columbia, James said he never asked to be cut from it and supported standing by St. Louis even if the repeal may not affect his city anymore.

Mayor Slay argued there were no exemptions to the earnings tax in St. Louis as Lewis stated, and that abatements were a separate issue.

“There are no huge loopholes, there are no exemptions to the earnings tax,” he said. “There’s no one we know about that has earnings in the city of St. Louis that is not paying earnings tax.”

Slay also said St. Louis had passed a law last month to adhere to the Wynne standard, though it did not before then. He also reiterated that taxes paid in St. Louis, or any city, went to services for everyone in the region, especially those that lived and worked in the city.

“When you buy something and go to some other city, you’re paying taxes on something you didn’t vote on. This is not an unusual thing. Everybody who pays the earnings tax benefits by the taxes that they’re paying, using the roads, public safety, courts in case something comes up.”

English was satisfied with both Kansas City and St. Louis’ arguments regarding constitutionality and said he planned on withdrawing his bill.