By Rep. Joshua Peters, D-St. Louis
The St. Louis City Earnings Tax became law in 1954 and since then those living or working in the City have paid 1% of their income to support general city services, including police and fire. Approximately a third of the tax base of the city comes from this form of local income tax. By definition it is not a regressive tax, but after 62 years it may be time to look at if it is applied in the fairest manner possible.
At the Federal level there are seven income brackets above a cut-off below which income is not subject to the income tax. Those in the highest income brackets pay nearly four times the percentage of their income than those with the lowest levels of taxable income. There are also personal exemptions, Earned Income Tax Credit, and other tax exemptions and credits designed to make the tax burden fall more fairly.
It does not help people work their way out of poverty to tax 1% of the lowest incomes. I believe the time has come to look at a graduated earnings tax. With reauthorization of the tax on the April ballot, and knowing of its importance to the operation of essential services, I did not want to propose specific language that might hurt its reauthorization. But I did want to raise the issue in order to start a dialogue between city and state leaders on reforms that could be adopted after April.
Representing a district with high rates of poverty, I know how important every dollar is to low wage earners. The working poor need every advantage we can extend to reverse generational poverty. I applaud the effort made by city officials to try to implement a higher minimum wage and condemn those in the Missouri General Assembly who stripped them of that right. But that same $15,000 a year minimum-wage earner should not have to turn around and give 1% of their subsistence salary to the city when the person earning $300,000 has greater resources to pay a little more.
Unlike the IRS and the State of Missouri, St. Louis does not tax lottery or gambling winnings, but we do tax the tips you give your server. That alone should say something about the need for reform.