Most Important Non-Project for St. Louis
This week’s poll attempts to cover those non-project items that could improve St. Louis:
- Reduce the number of wards from the current 28
- City becomes St. Louis County’s 92nd Municipality
- Elimination of city earnings tax
- Switch to non-partisan local elections
- City takes over police department from state of Missouri
- None of the above
- Unsure
You will note that schools & crime are not on the list. We can’t just pass a measure that improves schools or reduces crime.  Options on how to accomplish these will be on a future poll.
For this post I ask that you stay on subject. If you can think of something that could be offered on a ballot item please suggest it below. The poll is in the right sidebar.
– Steve Patterson
Wait, so how do I see the results from last week?
None of that is going to either matter or help. The city will remain corrupt no matter how many wards there are, the corruption of the city will not allow the police force to operate any better than it already operates, the incorporation into the county won’t happen and really isn’t going to help all that much (it may even be a detriment).
Non-partisan elections? Are the parties really going to just give up on Saint Louis? The money will still be there to back traditional Democratic Party loyalists. Even if that were the case, we’d simply have corrupt non-partisan alderman instead.
I am really leaning toward the city rejoining the county. That would allow the city to annex new land, thus increasing its population and tax base.
I voted to reduce the number of wards. Not only should there be less but I think that at least some members of the board of alderman should be elected by citywide vote. By having a single election in which the top however many vote-getters win seats we would see more competition and less party-machine politics. Look at what has been done in Cincinnati and Atlanta as examples.
I voted “none of the above”. While merging St. Louis city and county would take care of the difficult earnings tax, filtering city tax money through government in Clayton would see a reduction in income. Additionally, if current trends continue St. Louis county might be on the precipice that St. Louis city was in 1950. While Ladue and Clayton will remain sound one only has to look north to the woes in Pagedale and Jennings to realize the is a bad deal. Maybe the city and Clayton should just merge?
The single biggest problem is governmental representation, but slimming the number of wards will not help. We need to revisit the charter reform of 1914 and reinstate *representation at large*. This could either resemble the pre-1914 bicameral system or replace the ward system. It might be noted that in 1914 centralized government had been championed by the business interests who realized at the time that it made for more effective governance. Their loss had a major contribution to the inability to deal with changes that swept the city between 1945-1980.
Just like in 1914, shades of libertarianism and paeans to “neighborhood control” are cannily used to keep the city fragmented by regressive politicians. Career aldermen typically use the specter of authoritarian central government to keep milking votes from under-served and often apathetic constituents. Most national cities that are examples of positive growth and that have been better positioned to face the tough economy have some professional bureaucratic system of representation-at-large. Those that maintain aldermanic systems include Baltimore and Detroit. The question remains: is this any way to run a successful city and do we have the courage for meaningful reform?
I see non-partisan elections as being the least relevant of the proposed changes. All of the big west coast cities have non-partisan local governments (e.g., San Diego, LA, SF, Portland, Seattle), and all except for San Diego end up electing exclusively Democrats to local elective offices. I don’t really see what difference it would make to drop the letters after the name.
Honestly, the smaller wards should make government more accountable. It should be easier, and cheaper, for honest people to get into politics.
It’s more of a failure of culture….perhaps individual nerve and dedication, that keeps the status quo in place.
In order of priority:
1. Elimination of city earnings tax – If you own a business and don’t live in the city (and more and more do), it’s a huge personal disincentive, and to avoid it, all you gotta do is move your business outside the city limits. And if you’re looking to move one into the region, it’s even more of a no-brainer. The only reason is that it’s politically toxic is that it would require raising property taxes, significantly, and/or reducing services. The solution is to have higher rates for commercial (income-producing) properties than residential ones.
2. Reduce the number of wards from the current 28 – Cut the number in half, to 14. By giving the remaining aldermen more responsibility, maybe the body will focus more on the city as a whole, instead of being a loose confederation of individual fiefdoms.
3. Switch to non-partisan local elections – Yes, those elected will continue to be primarily Democrats. The difference is that the party won’t be allowed to endorse (and fund) any one candidate, making it easier for someone outside the inner circle to compete on issues and ideas.
4. City takes over police department from state of Missouri – might or might not happen, but will have absolutely no impact on the day-to-day operations of the department. Any problems are ingrained and cultural, and it doesn’t matter if the mayor could appoint the chief directly or if the current board structure continues to do it.
5. City becomes St. Louis County’s 92nd Municipality – ain’t gonna happen, since there’s absolutely no upside for anyone in the county. And the idea that doing so “would allow the city to annex new land, thus increasing its population and tax base.” isn’t really true. I’m pretty sure that we abut existing cities, not unincorporated areas, so any annexation would require that city’s agreement – I seriously doubt that Maplewood, Clayton or U City would be interested in being “absorbed”, and I’m not sure I’d want St. Louis assuming the liabilities of a place like Wellston.
Jim – we abut unincorporated land in south county.
You raise some good points, Jimmy Z, about the incorporation problem. It sounds to me like the city has a catch-22: it needs money and expansion to improve yet its very lack of same prevent it from getting the opportunity.
Jeff is correct almost the entire areas known as Affton and Bayless are unincorporated. In fact, you can find a strip of land all the way to I-270 that is so. However I expect they’d try to incorporate rather than be absorbed by the city as the schools, particularly Affton schools, outperform the city schools.
Why we shouldn’t and can’t get rid of the earnings tax: http://www.stlbeacon.org/in_the_news/what_s_good_about_the_city_earnings_tax_
No one is suggesting that the City and County merge, nor that the City would be able to annex existing jurisdictions — even the unincorporated areas are governed by County government offices who are unlikely to just hand things over to the City. However, if the City joined the County as a 92nd municipality, the combined population would be over a million — the mark which the County just sunk below — and the combined jurisdiction would have improved chances at receiving certain types of federal funding. This is an upside for both. However, the urban problems of the 21st century are almost certainly going to be in the suburbs, so by joining the County will the City just be attaching itself to new problems? I’m waiting for more information. The move would probably have no effect on the earnings tax — Kansas City has one and they are a part of Johnson County — and property taxes are still at least partially allocated to municipalities, which set their own property tax rates. The County just conducts the assessments and facilitates tax collection.
What would be the benefit to the Alderman to reduce the number of wards? Would there be the same pot of money to pay them? I don’t know why any of them would vote to eliminate their jobs unless the remaining ones got a hefty raise. You’d probably have to reduce it to a number greater than half of the existing wards in order to get the votes. I think you’d have to back up a step and say the most important thing is to change the Alderman themselves to ones that would consider voting for a progressive agenda. Good luck implementing any of the changes. If one of those major changes happened in the next decade I’d be surprised.
Annexing additional land would not necessarily have to affect school districts.
@ JimmyZ:
“The only reason is that it’s politically toxic is that it would require raising property taxes, significantly, and/or reducing services. The solution is to have higher rates for commercial (income-producing) properties than residential ones.”
I don’t know how often you make it in to St. Louis city, but the city is having a hard enough time providing basic services as it is. Without the earnings tax I seriously doubt the city would be able to keep streetlights on and our streets (bad enough as they are) would probably be as bad as those in New Orleans.
While a commercial/residential property tax split would help with financing it is anti-urban. Such a split would further legislate a difference between residence and business and stymie any further efforts towards the legislation of live/work typologies. If you examine the historical fabric of this city to realize how important live/work was to the urbanism of St. Louis and one only has to visit the county to see the anti-urban results of separated uses that Steve often rails against.
Get rid of the earnings tax and slap a couple of Wal-Marts up within the city limits. The extra revenue generated by them will be more than enough to offset whatever is lost from doing away with the earnings tax. Wal-Mart…the saviour of Saint Louis.
I know, I know, the earnings tax makes up something like 40% of the city’s budget – it’s huge. It also made a whole lot more sense 50+ years ago, when most commercial activity was centered in the city, and not in the adjoining counties, as it is today. The earnings tax is also “great” in that it taxes both residents and non-residents. The fundamental problem is that both wealthy residents and business owners have a whole lot more options in the 21st century and too many of them are exercising them and choosing to locate outside the city. Like they say, it’s the economy, stupid. A 1% tax on nothing equals nothing. Our metro area continues to grow and sprawl while the city’s population remains stagnant – we’re capturing less and less of the pie. We can either “stand on principle” and continue to rely on a stagnant, and likely declining, tax vehicle (the earnings tax) or we can face reality and become more competetive.
Andrew and Jimmy,
Businesses currently only pay a 1/2% payroll tax. City residents and those who live elsewhere and commute to work in the City pay a 1% income tax. If you work in the City, moving to the suburbs won’t affect how much you pay. The problem is businesses leaving the City — if you live in the City and work in the suburbs, that 1% might factor into your decision.
Property taxes already are levied differently for residential and commercial property — residential is assessed at 19% of market value and commercial at 32%. Even though rates may be the same, this means very different payments. Increasing further the rate paid by businesses would be an incentive for them to move to the suburbs. But that doesn’t matter, because all cities in Missouri are restricted by state law in how they may increase property tax rates.
The earnings tax makes up about 39% of revenue. We can’t replace it with property taxes and we shouldn’t get more into the sales tax competition game than we already are. Furthermore, shouldn’t commuters pay for the services they enjoy while at work in the City?
Follow this discussion:
http://www.stlbeacon.org/in_the_news/what_does_the_earnings_tax_cost_st_louis_and_kansas_city_
http://www.stlbeacon.org/in_the_news/what_s_good_about_the_city_earnings_tax_
http://www.stlbeacon.org/in_the_news/earnings_tax_letter_from_joseph_haslag
Our metro area is stagnant — our growth rate is something like 1% every 5 years and is likely less than the rate of natural increase. Our share of that pie is and has been decreasing for many complex reasons that are not the earnings tax.
I voted for elimination of the earnings tax. That article from The Beacon did not present much compelling evidence.
Brian,
Which part? The payroll tax or the earnings tax? For residents or non-residents? Do you have a way to replace 39% of revenues? Elaborate. All arguments against it ignore the complexities and consequences.
Nobody like paying taxes. People who live in Illinois and work in Missouri buy their gas here to avoid paying the higher taxes in Illinois. People who live around Boston make major purchases in New Hampshire since NH doesn’t have a sales tax. People used to like to register their RV’s in Oregon since it was something like $35 a year do so. The fundamental problem with the earnings tax is that St. Louis is the only place in the region that collects one. If all the other cities and counties did the same thing, it’d be a non-issue. But since all the others don’t, it puts us at a significant disadvantage when it comes to competing economically, especially for new, well-paying jobs and “good” businesses.
For a simple example, use a fifty-person law firm with average taxable earnings of $100,000 per employee. If they choose to locate in or to stay in the city, they pay $75,000 annually in earnings taxes. If they locate in or move to Clayton, each employee gets an extra $1,000 to spend as they please and the firm saves another $25,000 as an entity. This ain’t chump change, and it does influence decision making, especially if the principals (the true decision makers when it comes to location) are making $500,000 annually and looking at “giving” the city $5,000+ each every year!
I don’t disagree that it’s “fair” – it’s collected based on an assumed ability to pay and it touches both residents and non-residents who consume city services. Similar things can be said about sales taxes, but the hard reality is that, at ±9-10% in the city, we’ve reached a threshold that will drive major purchases outside the city if the sales taxes are further increased. Property taxes are a different animal, since most individuals have little control over their property values, and even less control over their annual assessments, but they’re about the only alternative to an earnings tax. Unfortunately, we’ve boxed ourselves into a corner with our increasing reliance on a tax source that none of our competitors (and yes, that’s what they are) imposes.
Rob, the one part that you left out is the option of both living and working outside the city, which, to many people, is increasingly attractive. If you employer moves (or you change jobs), you’ll likely have a longer commute if you choose to live in the city. Schools in most suburban areas are perceived to be better than SLPS. There’s many reasons why housing costs are lower in the city than in places like Webster Groves, Kirkwood and Chesterfield, all driven by demand. The earnings tax is one part of the decision matrix, not the only one, but definitely a consideration, much like schools, property taxes and an easier commute.
Jimmy,
No one denies that municipalities within metropolitan areas compete with one another for residents and businesses. Consider six central cities: St. Louis, Philadelphia, Pittsburgh, Baltimore, Milwaukee, and Buffalo. All compete with their suburbs and all have been losing, though to admittedly varying degrees. The first three have earnings taxes, the second three do not. Clearly there are and have been other policies that have been tilting the advantage towards suburbs. You brought up schools and commutes — these are issues impacting location decisions in all six cities. Disparities in school quality is the result of housing policies that favor suburban development and encouraged the segregation of income groups as well as the system that funds schools primarily through property taxes. Easier commutes in the suburbs are largely the result of transportation policies that favor the expansion of interstate highways over public transportation and investment in municipal infrastructure. Additionally, external forces of de-industrialization, shifts in immigration centers, and changing preferences have surely had an impact on these cities.
The fact is that it is easier to blame St. Louis’ problems on a single tax than attempt to fully understand all of the issues. The perpetuation of a misunderstanding — particularly by urbanists — will do nothing address the root causes of our problems.
So would removing or modifying St. Louis’ earnings tax lead to greater growth? To know for sure would require a much more sophisticated analysis than has been attempted so far. In the meantime, I’ll submit that maintaining a certain level of public services funded by the earnings tax is in our best interest.
Rob,
1. The earnings tax. I don’t know if other cities/counties enact payroll taxes, so I don’t know if that puts the city at a disadvantage or not.
2. I’d like to see the city take a good look at Dr. Haslag’s multi-tiered property tax proposal.
All the column from The Beacon tells me is that the earnings tax provides a substantial portion of the city’s budget, which we’ve known for a long time. That doesn’t tell me anything about what’s “good” about it. It just tells me that it’s important.
Simple math:
Employer Math –
Jimmy Z you are incorrect. If there is a 50 person firm in the City with each employee earning $100k annually the total earnings taxes paid by the employer is $25,000 not $75,000.
50 * $100,000 = $5,000,000;
$5,000,000 * 1/2% (0.005) = $25,000
Individual Math –
The median income in St. Louis County is $62,647 ( http://www.stlrcga.org/x409.xml ). This means the typical County-dweller that works in the City pays a whopping $626.47!
The median income in St. Louis City is $33,386 ( http://www.stlrcga.org/x408.xml ). This means the typical City resident pays a whopping $333.86!
Big F-in’ deal!
Neither the individual or employer earning taxes are cost prohibitive.
Brian,
Other cities in the St. Louis region do not levy payroll or earnings taxes. However, as my last post explains there are many other, and larger, factors tilting the advantage towards suburbs.
I’d like to see Dr. Haslag take a good look at Dr. Haslag’s proposal and explain how it would fix anything. He hasn’t done it yet and his misunderstanding of the earnings tax doesn’t give me much confidence that he ever will.
The earnings tax is good because it is fair. In fact, its about as close to a flat tax as you can get. Individuals should pay for the services they consume while in the City — the article states that the earnings tax requires the 263,000 suburban residents who work in the City do just that.
Of all the options Steve listed, only eliminating or reducing the earnings tax will have a major, positive and immediate impact on the city’s economy and our perception by outsiders. Reducing the number of wards, becoming St. Louis County’s 92nd municipality, switching to non-partisan local elections and/or having the city take back control of the police department, along with adding term limits for all local elected offices, are all essentially wonk issues. An alderman is only legally a legislator, but, by tradition, has also become the de facto face of the city to local residents, the go-to guy or gal, for all issues, large or small, essentially an ombudsman, a.k.a. the proverbial “ward healer”. That won’t change until the underlying culture changes, even if all the other options were magically adopted by the end of the year. Too many people are too comfortable with the present system, warts and all – “If it ain’t broke, don’t fix it”!
Rob, I agree, there are many factors that influence where a person or a business chooses to locate. I also agree that an income/earnings tax is less regressive than a sales tax and better-reflects one’s ability to pay than a property tax does. My point has been and continues to be that if NONE of your competitors are doing something that can be, and is, viewed as a negative, why do you keep doing it?! Even if it’s the “best” solution from an academic or a political standpoint? St. Louis is not a Boulder or an Austin or a Charlotte – we don’t have lots of potential businesses and residents clamoring to move in. If anything, more are moving out than in. The suburban alternatives are many and easy. We can’t simply assume that people are willing to pay whatever price we dictate, just to be here.
I also don’t disagree that St. Louis has a large budget, many needs and few options to replace the earnings tax. But the real solution is to grow/rebuild the city’s economy – more and better jobs will generate more in tax revenues than trying to squeeze more out of the present, stagnant base. And if the earnings tax is a major hurdle, it needs to looked at, plain and simple. What is your solution? Force our suburban neighbors to start collecting an earnings tax? So they can reduce their sales and/or property taxes? And while there are potential savings in any city’s budget, I don’t have enough information or the time to do the research to claim that ours is more-poorly run than our neighbors’. So, without reducing the budget, we really have only two options – keep the existing mix of taxes (and hope for the best) or change the mix (and bet on economic growth).
And Seth, to clarify, $1000 from each $100K employee equals $50,000 + the $25,000 that comes directly from the firm, to total the $75,000 I stated. I also agree that the $333 paid by our median resident is a much smaller hit. The problems are twofold. One, the decision makers/business owners typically make much more than the median, and two, as a community, we’d be MUCH better off if our median wages equaled or exceeded those paid in the county – as your statistics illustrate, the earnings tax IS a bigger disincentive to exactly the people and the types of jobs we’re trying to attract – just because they CAN pay more doesn’t mean they WANT TO pay more, and if moving a few miles away “solves the problem”, then guess what, choosing to locate in the suburbs suddenly becomes more and more attractive!
City’s have traditionally had higher taxes. There are very few cities on earth where the tax rate is lower than rural and suburban towns and cities.
If Saint Louis is going to continue to develop it needs to operate like a city: higher taxes for greater services. Well-developed mass transit, free cultural and educational institutions, parks, recreation, crime prevention…etc..etc. We should be focusing on building the city, not starving it of funds.
We will NEVER be able to compete with the suburbs and rural zones when it comes to certain things: parking, tax-rates, crime (though we can bring it far below what it is now). But we can attract people with what Saint Louis has to offer: Zoos, museums, Universities, Mass Transit, indie commercial districts, art, first-class parks.
Penny-pinchers will be penny-pinchers, but as a small-business operator myself, the taxes have NEVER been prohibitive…especially when compared to the benefits of living in the city.
“Taxes are the price we pay for civilization.”
— Oliver Wendell Holmes, Jr.
Jimmy,
Where is your evidence that removing the earnings tax will do anything at all to encourage new investment? Given the evidence from other cities who do not have earnings taxes and have been experiencing similar declines, the tax is a very minor factor in people’s decisions compared to all of the others — perceptions of schools/crime, accessibility and commutes, land prices/rents, etc.
Even if the tax’s removal did lead to some uptick in investment, how long before the benefits would be realized in sales and property tax revenue? Do you realize how many billions of dollars of new construction or sales would need to happen to cover $180 million? Not to mention the city’s record on tax-abating and TIFing every shovel that hits the ground. “More and better jobs” aren’t enough — remember, we’re not taxing incomes anymore — it would have to come in big unincentivized investments in real estate and major retail projects. And you said yourself that the region is not growing, so where are these projects going to come from? I’m not even saying it isn’t possible — just tell me what this would look like. And as you do it, keep in mind Milwaukee and Baltimore and their lack of earnings taxes. To help you out, let’s say we can finance the gap left by the earnings tax removal for up to five years.
And as for all of these high-income workers we’re supposedly turning away, in 2007 the 17-county Metropolitan Statistical Area had about 75,000 households out of 1.1 million earning $100,000 or more (less than 7%) and only 35,000 earning $200,000 or more (about 3%) — and a good portion of these are likely to be the combined incomes of two workers. These rich people that would be saving the city if only we weren’t turning them away with this huge tax simply don’t exist in any significant numbers. For the average worker, as Seth pointed out, the earnings tax isn’t a major concern. When it makes sense for their firm, after all of the other bigger considerations I’ve mentioned a million times, they will pay the few hundred a year for the right of living or working and enjoying the advantages in the central city.
The earnings tax is only viewed as negative because no one tries to understand it. A likely problem in our own discussion here is that we’re not talking about how the earnings tax is actually three taxes: 1/2% payroll tax on businesses, 1% income tax on City residents, and a 1% tax on the incomes of suburban residents commuting to the City. As a matter of fairness, commuters should pay for the services they enjoy — NYC taxes them at something like 4% and they seem to be doing just fine for themselves. If these small taxes really are impacting decisions in a major way — and I don’t believe that they are — how can they be tweaked in a way that let’s the City remain able to provide the services that preserve its competitive advantages? Would we prefer more residents or more businesses? If they can’t be adjusted, then we need to focus on finding other ways to build on the strengths that Angelo alluded to. In the next few decades the odds are tipped in central cities’ favor. St. Louisans should be thinking proactively for once and looking to build on our strengths, not react as “one suburb among many” as we have for 50 years.
Rob, “Where is your evidence that removing the earnings tax” WON’T “do anything at all to encourage new investment?” We’re talking hypotheticals here. It’s kinda like if we came up with the bright idea that we should tax everyone with school-age kids a per-kid tax to send them to better schools. Wait, we already do that – it’s called the parochial school system, and guess what, some people (not all, but too many) are voting with their feet. You and I both agree that location decisions are complex and that there rarely is truly a single make-or-break issue. We just have a fundamental difference of opinion on the impact of the earnings tax. In my small universe it’s viewed negatively by many suburbanites, some of whom might consider moving into the city, either to live or to operate their business, but don’t/won’t. (I live in the city, by choice, but have worked exclusively for non-city employers, not by choice, but because that’s where the jobs were.)
And no, I don’t accept NYC as a valid comparison. High taxes do not equal a great city. It doesn’t matter if they’re income (NYC) or property (NJ), astute businesses are always looking for a better deal. Yes, any city needs a certain, higher level of combined taxes to support the level of services we’ve come to expect and/or need. And no, I don’t have THE answer on how to replace the earnings tax here – a gradual phaseout is likely the only option – I just believe, strongly, that if we’re doing something that Clayton or Chesterfield or O’Fallon isn’t, we’re stacking the deck against our own efforts. It’s not that “no one tries to understand it”, they do! It’s simple, actually too simple – if you stay out of St. Louis, you save 1-1½% in taxes you’d otherwise pay. It’s a disincentive because it IS so easily understood. And in today’s economic environment, we don’t need any convenient excuses for removing the city from consideration, especially when, as a land-locked city-county, there are multiple, comparable, suburban options that are an integral part of the metro area!
My evidence, which I’ve mentioned roughly one million times, are all of the rust belt and other cities like St. Louis that are in the same situation and do not levy earnings taxes. Your evidence is a gut feeling and anecdotes from your acquaintances.
NYC was offered up only to show their tax situation that only taxes commuters and introduce the idea that maybe we could explore how to shift who we tax. For valid comparisons, look to Milwaukee or Baltimore — also an independent city — without an earning tax and who is losing to its suburbs for the same school quality, global economic, etc etc etc issues as us. Each of these have no earnings tax and they are declining as much or more than us.
The earnings tax is understood in that people understand that it is more. They don’t understand what they get for it, why it is fair, why it is necessary, etc.
Just like with the earnings tax, there are a million reasons parochial schools are shrinking — people waiting longer to have kids, more and more kids being born to non-Catholic families, older parish populations not being replaced with young families, and on and on. You need to stop looking for a silver bullet to every issue.
A very interesting discussion on the earnings tax–
I see eliminating it as a PR move as much as anything else. Right now the cynical pitch is, ‘Come live in the city. The tax rate is higher, the crime rate is higher, the dropout rate is higher!! What more could you want?’ Of course, the city offers many amenities, too, but crime and schools are two things that a heck of a lot people put at the top of the list when deciding where to live.
Vendors, or cities, can compete on service/quality like BMW, Ivory Soap, or they can compete on price, Wal-Mart, Kia Motors. St. Louis is not competing on price with the earnings tax, nor is competing on quality for reasons above. Where does that put it? Not in a great place.
I also hate it when people deride the earnings tax, people immediately say that cuts would then be needed in fire and police. How about cuts in treasurer’s office, or some patronage factory?
Do Baltimore and Milwaukee have secondary downtowns just a few miles from their CBDs?
Baltimore has Towson and there are two little towns called Washington, DC and Chicago. But by mentioning those I am buying into your assumption that all business move from a downtown to another downtown. This might happen a hundred employees at a time with law firms and things like that who need to be near courthouses or government activities (or at least other firms who do), but overwhelmingly the move from downtowns is to suburban campuses. Look at Scottrade, Edward Jones, Mastercard, etc etc
The fact is even Clayton has been on a path of relative decline since its peak sometime in the 1970s. Firms now leave Clayton for suburban campuses in Maryland Heights and Creve Couer. Clayton doesn’t have an earnings tax forcing them out — there are forces above the regional level driving all of this.
I’m not assuming anything, just asking.
You’re right, some “Firms now leave Clayton for suburban campuses in Maryland Heights and Creve Couer”, and not because of any earnings tax – they do so for lower rents, free parking and better freeway access. I do disagree that “Clayton has been on a path of relative decline since its peak sometime in the 1970s” – there seems to be more construction going on there now than pretty much anyplace else in the region . . .
As a city resident and employee in the city, I speak about the earnings tax with first hand experience.
I don’t mind it. It is the only tax out there that is truly a fair and flat tax. Everybody pays it. I pay it, the parking attendant in my building pays it, the guy who maintains my building pays it. 1% from each of us. It’s the only tax with no deductions, and no gaming the system.
However, it does stink that we are the only municipality doing it. But what is the alternative? No taxes means no services, and that isn’t a solution.
Not no taxes, different taxes! Unfortunately, sales taxes are already high in the city, so the likely only alternative would be higher property taxes.
The most recent data puts the city budget at ±$800 million. The earnings tax makes up 30% of the city’s revenues (±240 million), payroll taxes make up 8% (±$64 million), while our property and sales taxes generate 11% (±$88 million), each. (And extrapolating out, it appears that nearly half of the earnings taxes come from city residents who work outside the city.)
Only 42% of our property taxes goes to city services (the public schools get the rest). If $88 million equals 42%, total property tax revenues are ±$210 million. IF we were to shift completely from both earnings and payroll taxes to property taxes (and maintain the same revenue levels), property taxes would have to go up by nearly 150% (more than doubling) – ouch! And if we were to keep the payroll taxes and eliminate the earnings taxes, property taxes would have to approximately double. Like I said, no easy answers . . .
Jimmy,
Didn’t you just disprove the plausible implementation of your own idea? Besides, how is dropping a tax in one area and drastically raising it in another going to help bring people in who don’t like the taxes to begin with?
I’d be happy to drop a universal tax for a punitive one: taxing the crap out of parking lots, strip malls, derelict buildings, fast food restaurants, casinos…etc…
You’re kinda correct, sir – What I haven’t been able to compare is city property tax rates to those in the county – I do know that we pay taxes based on a percentage of assessed value, not full assessed value, and it appears that (some?) county tax rates are based on full assessed values. It also doesn’t address the potential shades of gray – do city residents continue to pay a city income tax (could be “fair”)? Do we continue or increase the payroll tax? Do we cap the tax at some arbitrary number (Denver charges a flat monthly occupational privilege tax on both employees and employers)?
Like I’ve said all along, I don’t have the magic answer, and anytime you mess with taxes, some people will pay less, some will pay more, and those paying more will scream loudly about the injustice of it all. My fundamental point, however, remains – the earnings tax is perceived as a disincentive by many in the county, and beyond, our competitors. If we can reduce or eliminate it, or do a much better job of explaining it and how savings in other areas (lower property taxes? cheaper rents?) offset it, we can become more competetive. Bottom line, it’s the bottom line – I don’t think taxes are out of line for the services we receive in the city (just ask my brother in New Jersey). We just come to the eco devo games with a lot of other baggage (perceptions and reality), and as Steve asked initially, I think this is the “Most Important Non-Project for St. Louis”.
And for a really fuzzy view of a potential future, down in Jefferson County (Birmingham), Alabama, “A judge ruled the county’s occupational tax is illegal and courts refused to let the county spend the revenue from it while officials appeal. By Monday, at least a quarter of the county’s 3,600 employees will be on unpaid leave and many county offices will be closed or cutting back hours.”: http://www.tampabay.com/incoming/article1023828.ece
One reason it was ruled illegal is that professionals who must buy business licenses now do not pay the occupational tax; a pending new law would cover everyone. Other issues are covered here: http://politicsalabama.blogspot.com/2009/04/jefferson-county-occupational-tax.html
These kind of conundrums will always be present when there are so many different taxes and fees. It would be much easier to compare if at the end of the year you could compare the bottom line tax outlay, but that is impossible.
In order for any valid tax discussion to take place, you would need more data than any person could reasonably be expected to garner in one place.
And for a few more ideas: http://www.youtube.com/watch?v=U5oVzbwYWpg&feature=player_embedded 😉