JEFFERSON CITY, Mo. – State Representative Shamed Dogan, R-Ballwin, today became the fourth lawmaker to introduce legislation that aims to eliminate the one percent earnings tax in St. Louis and Kansas City. The earnings tax is a one percent local income tax charged to any person who lives, works, or owns a business in Kansas City or St. Louis city limits.
“The City of St. Louis has lost 63% of its population since the earnings tax was first introduced in 1949,” said Dogan. “This is a regressive tax and it’s time for our region to be proactive in planning for life without the earnings tax.”
Dogan pre-filed two different bills; one that would repeal the earnings tax in 2019, and another that would simply exempt non-residents of St. Louis City from paying the tax there.
While voters currently have the option to either renew or phase-out the earnings tax every five years, Dogan is concerned that only residents in the City of St. Louis are authorized to vote. “St. Louis uses the earnings tax to collect millions of dollars from St. Louis County residents—including many of my constituents—who don’t have the right to vote on the issue or to determine how their tax dollars are spent. That is taxation without representation.”
A recent United States Supreme Court ruling (Maryland Comptroller vs Wynne) has also triggered a national debate about the constitutionality of income taxes levied at the city and county level of government. Justices said the tax in Montgomery County, MD violated the Constitution’s commerce clause because it might discourage individuals from doing business across state lines.
Kentucky is Missouri’s only border state that authorizes counties and cities to impose their own local income taxes in addition to federal and state income taxes.
“There are more than 950 cities in Missouri and 15,000 municipal governments nationwide that operate without an earnings tax,” said Dogan. “It’s time for St. Louis City to look at best practices and implement a pro-growth plan that will help grow our region and our state.”