Readers: Remove Payroll Tax Exemption From Not-For-Profit Employers With More Than 20 Employees

Employers in the city pay a one-half of one percent payroll tax, but many have been exempted from this requirement. Ald Conway wants to end the exemptions for those with 21 or more employees:

BOARD BILL NO. 58 INTRODUCED BY ALDERMAN STEPHEN CONWAY An ordinance pertaining to the payroll expense tax, repealing, subject to voter approval, those exemptions from the tax in section nine of ordinance 60737 for religious and charitable organizations and institutions, not-for-profit civic, social, service or fraternal organizations, not-for-profit hospitals and not-for-profit educational institutions that employ more than twenty (20) employees; submitting to the qualified voters the question whether the exemptions to the payroll expense tax for religious and charitable organizations and institutions, not-for-profit civic, social, service or fraternal organizations, not-for-profit hospitals, and not-for profit educational institutions that employ more than twenty (20) employees shall be repealed and a payroll expense tax of one-half of one percent (0.5%) imposed; providing for the conducting of an election on such a question; providing, upon voters’ approval of such repeal of the exemptions, for the effective date for imposition of the payroll expense tax upon religious and charitable organizations and institutions, not-for-profit civic, social, service or fraternal organizations, not-for-profit hospitals, and not-for-profit educational institutions that employ more than twenty (20) employees; with an emergency clause.

If you look at the language in Board Bill 58 you’ll see it doesn’t mention any by name, just “religious and charitable organizations and institutions, not-for-profit civic, social, service or fraternal organizations, not-for-profit hospitals, and not-for profit educational institutions ” I’ve never been a fan of Ald Conway, but I agree with him on removing exemptions.

I’m not sure how 20 employees become his threshold. Why not 15 or 25? No threshold at all? Hopefully this will be discussed in the committee hearing on the bill. Ald Conway just happens to be Chair of the Ways & Means Committee. The committee meets at 9am this morning, but #58 isn’t listed on the event page.  Either it isn’t being considered or the website is out of space to list additional bills.

Committee members are:

• Stephen Conway, Chair
• Pam Boyd
• John Collins-Muhammad
• Marlene E Davis
• Carol Howard
• Samuel L Moore
• Beth Murphy
• Joseph Vaccaro

In the recent non-scientific Sunday Poll a majority of readers agreed these should no longer be exempt:

Q:  Agree or disagree: Large not-for-profit employers should remain exempt from a St. Louis payroll tax.

• Strongly agree 5 [16.67%]
• Agree 1 [3.33%]
• Somewhat agree 4 [13.33%]
• Neither agree or disagree 1 [3.33%]
• Somewhat disagree 3 [10%]
• Disagree 8 [26.67%]
• Strongly disagree 8 [26.67%]
• Unsure/No Answer 0 [0%]

If the Board of Aldermen approves this bill citizens would vote on removing the exemption. Just because a majority here favored removing the exemption doesn’t mean voters would do the same.

— Steve Patterson

Large Turnout For Tuesday’s General Election

Tuesday’s general election had the highest turnout of any April general in the City of St. Louis for the last decade!

Voter turnout was twice as high for this city general election than four years ago, the last time the mayor’s race was on the ballot. Voter turnout was 30 percent, or about 59,000 voters, while in 2013 turnout was 12.5 percent of voters. (Post-Dispatch)

Must have been the propositions on the ballot because the races for Mayor, Comptroller and half the Board of Aldermen, weren’t competitive at all — the Democratic nominee won by wide margins in every race. Nobody should be surprised.

St. Louis continues wasting money every two years by holding a partisan primary followed a month later by the general election. This gives the illusion that different political parties matter in St. Louis. They don’t.

Proponents of nonpartisan ballots suggest that:

• Political parties are irrelevant to providing services.
• Cooperation between elected officials belonging to different parties is more likely.

Proponents for partisan elections argue that:

• The absence of party labels confuses voters; a voter who must choose from among a group of candidates whom she knows nothing about will have no meaningful basis in casting a ballot.
• In the absence of a party ballot, voters will turn to whatever cue is available, which often turns out to be the ethnicity of a candidate’s name.
• Non-partisanship tends to produce elected officials more representative of the upper socioeconomic strata than of the general populace and aggravates the class bias in voting turnout, because in true non-partisan systems there are no organizations of local party workers to bring lower-class citizens to the polls on election day. (League of Cities)

If voters only look to see who the ward committee endorsed in the primary or for the “D” in general it explains a lot about the state of St. Louis. We need educated voters who know the issues and candidates!

REJECTED BY VOTERS:

PROPOSITION A AMENDMENT TO THE CITY CHARTER (Proposed by Initiative Petition)

A proposed ordinance submitting to the registered voters of the City of St. Louis an amendment to Article XV of the City Charter repealing Sections 4 and 5 and enacting in lieu thereof four new sections, Sections 4, 4a, 4b and 5, the purpose of which is to abolish the Office of Recorder of Deeds and consolidate the functions of that office with that of the Assessor, and place any realized cost savings in a special fund known as “the police body-worn camera fund” dedicated to the purchase and use of police body-worn cameras by the city Metropolitan Police Department subject to appropriation from the fund by the Board of Aldermen for the express purpose of the fund (the full text of which is available at all polling places).

PROPOSITION B AMENDMENT TO THE CITY CHARTER (Proposed by Initiative Petition)

A proposed ordinance submitting to the registered voters of the City of St. Louis an amendment to Article II of the City Charter repealing Sections 1, 2 and 3 and enacting in lieu thereof four new Sections 1, 1(a), 2 and 3, the purpose of which is to move the Primary Municipal Election date from March to August and the General Municipal Election date from April to November in even-numbered years, commencing in 2020 and continuing every two years thereafter, and providing for a transition to accomplish those changes (the full text of which is available at all polling places).

PROPOSITION 2 (Proposed by Ordinance)

Shall the use tax paid by businesses on out-of-state purchases and derived from the one half of one percent increased use tax, which corresponds to approval and levy of an Economic Development Sales Tax in the City of St. Louis, be used for the purposes of minority job training and business development programs, and a portion of construction costs, but not construction cost overruns, of a multipurpose stadium for soccer, local amateur sports, concerts and community events? A use tax is the equivalent of a sales tax on purchases from out-of-state sellers by in-state buyers and on certain taxable business transactions for which a sales tax is not levied. No taxpayer is subject to a sales tax and a use tax on the same transaction. The City shall be required to make available to the public an audited comprehensive financial report detailing the management and use of the portion of the funds each year.

PROPOSITION NS BOND ISSUE ORDINANCE (Proposed by Initiative Petition)

A proposition submitting to the registered voters of the City of St. Louis a proposed Ordinance authorizing and directing the issuance of general obligation bonds of The City of St. Louis, Missouri, not to exceed $40,000,000 principal amount in aggregate (of which no more than $6,000,000 in principal amount shall be issued annually) for the purpose of stabilizing, as limited by the Ordinance, residential properties owned by public entities, as described in the Ordinance, and authorizing the execution of an agreement relating to the expenditure of the sale proceeds of such bonds (the full text of which is available at all polling places).

APPROIVED BY VOTERS:

PROPOSITION C AMENDMENT TO THE CITY CHARTER (Proposed by Ordinance)

Shall Section 4 of Article XVIII of the Charter of the City of St. Louis be amended to add paragraph (f), which provides for the enactment of an ordinance establishing a residents’ preference to residents of the City of St. Louis upon successfully passing a civil service examination for civil service positions with the City?

Section 4. Ordinances to be enacted – The mayor and aldermen shall provide, by ordinance: (f) City Residents’ Preference. For a preference to be granted to residents of the City of St. Louis who successfully pass an examination for a civil service position.

PROPOSITION 1 (Proposed by Ordinance)

Shall the City of St. Louis impose a sales tax at a rate of one half of one percent for economic development purposes including (1) North/South Metrolink, (2) neighborhood revitalization, (3) workforce development; (4) public safety, and (5) to upgrade the city’s infrastructure, with annual public audits?

Old buildings will continue to deteriorate, the big hole in the urban fabric will remain West of Union Station. But as early as 2026 an 8-mile light rail North-South line will be running.

Francis Slay has been mayor for 16 of my nearly 27 years in St. Louis — hopefully Mayor-elect Lyda Krewson will be able to move the city in a positive direction.

— Steve Patterson

Opinion: Sales Taxes Outdated In 21st Century

We order stuff online frequently because it’s convenient to do so, not because we want to save on taxes. Often we’ll order from target.com so we pay the same tax rate we do when we shop at Hampton Village location once per month.  Amazon is the bulk of our online shopping so now we’ll pay 4.225% for Missouri sales tax. Fine.

There are lots of online retailers out there, from 2013:

Using figures from a variety of sources, including Internet Retailer’s Top 500 Guide for 2013 and data from the U.S. Census Bureau, ReferralCandy determined that there are 102,728 e-commerce retailers in the United States that are generating at least $12,000 per year in revenue. That’s a 13.5 percent increase over last year’s findings, which revealed 90,501 online retailers generating the same amount.

Other findings from the study include:

• 61,728 online retailers generate at least $25k in revenue (up 12.8 percent from the year before)
• 38,157 e-commerce merchants generate at least $50k in revenue (up 12.3 percent from the year before)
• 23,587 online merchants generate at least $100k in revenue (up 13.6% from the previous year) (Forbes)

So over 100k retailers should register with every state to be able to collect and report sales taxes?  I looked at three retailers located on Cherokee Street to see how they handle sales taxes on their online shops — they ship to every state:

Firecracker Press

• Collects 8.7% Missouri & St. Louis sales tax on orders shipped to Missouri customers.
• Doesn’t collect sales taxes shipped outside Missouri.

Spoked Bikes & Stuff

• Doesn’t appear to collect sales taxes on any online order, though a tax line appears in the cart.

STL-Style

• Doesn’t appear to collect sales taxes on any online order, no sales tax line appeared .

More than half of those who voted in the recent non-scientific Sunday Poll support online retailers collecting state sales taxes:

Q:  Agree or disagree: Online retailers, without brick & mortar stores in a state, shouldn’t collect sales taxes in that state.

• Strongly agree 6 [14.63%]
• Agree 5 [12.2%]
• Somewhat agree 1 [2.44%]
• Neither agree or disagree 1 [2.44%]
• Somewhat disagree 3 [7.32%]
• Disagree 9 [21.95%]
• Strongly disagree 15 [36.59%]
• Unsure/No Answer 1 [2.44%]

Oh, I bet many thought I was talking only about Amazon. Where is the line drawn in the sand? Is it based on sales shipped to each state? If so, the three small retailers on Cherokee would need to keep track of sales to each state and then begin collecting state sales taxes only when their sales to that state have crossed the threshold?

We pay taxes to receive services from the government(s). How governments collect revenue varies widely, not all collect sales tax:

In 2013, sales and gross receipt taxes nationwide totaled $254.7 billion — a 3.9% increase from the year before — which means Americans spent an average of $806 on sales taxes last year. That’s less than the $309.6 billion, or $979 per American, spent on state income taxes. However, including selective sales taxes, which are levied on goods like gas and cigarettes, Americans actually pay more in sales taxes than they do in state income taxes.

Sales taxes vary widely from state to state. Some states charge no sales tax, while some localities charges as much as 10% when state and local sales taxes are combined. Tennessee, on average, has the highest sales tax at 9.44%.

There are four states with no sales tax: Delaware, Montana, Oregon, and New Hampshire. A fifth, Alaska, has no state-level sales tax but allows municipalities to impose the retail-level tax. As a result, the average sales tax rate in Alaska is 1.69%. 

While 10% of U.S. states impose no sales tax, a much smaller percentage of the population lives in one of these states — only about 2.5%. (Motley Fool)

Let’s not forget the complex sales tax pool in St. Louis County.

I think it may be time to admit sales taxes as a revenue source is outdated by current technology & shopping trends. I’m not suggesting we need lower taxes — but that we need to find a better way to fund local & state government services.

— Steve Patterson

Opinion: Missouri Needs To Increase Fuel Taxes, Index For Future Adjustments

The last time Missouri’s fuel tax rate increased was 1996 — from a 1993 law that increased it a little for 3 years. Meanwhile, Missouri has built more miles of infrastructure to maintain and maintenance/construction costs have increased. There are many ways to raise money for roads & bridges but the most direct is fuel taxes.

Our legislators in Jefferson City need to address this issue — but I don’t see it happening. Even if they managed to pass a small increase our new governor would likely veto it.

The results of the recent Sunday Poll:

Q: Agree or disagree: Missouri should index fuel taxes so they automatically adjust up or down.

• Strongly agree 11 [40.74%]
• Agree 8 [29.63%]
• Somewhat agree 4 [14.81%]
• Neither agree or disagreeii 1 [3.7%]
• Somewhat disagree 2 [7.41%]
• Disagree 0 [0%]
• Strongly disagree 1 [3.7%]
• Unsure/No Answer 0 [0%]

In addition to increasing the fuel tax, there needs to be an index to automatically adjust it going forward. Not exactly sure the basis for the indexing, but we can’t go decades without a change since deterioration & increased costs never stop.

— Steve Patterson

Know Your Ballot: Propositions & Amendments

Absentee voting for the November 8th general election began in Missouri last Tuesday, but since I’m still researching items on the lower part of the ballot I haven’t voted absentee yet. I decided to start at the bottom and work my way up, so this post is my initial research on ballot issues. Most are statewide, but even the first applies to St. Charles County, St. Louis County, and the City of St. Louis:

Proposition S — senior services

Voters in 3 counties will vote on identical measures.

A November ballot measure seeks to create senior citizen service funds in St. Charles County, St. Louis County and St. Louis that together would raise about $18 million a year in property taxes to help people stay in their homes longer.

More than 50, mainly small, Missouri counties already have created similar programs to help provide transportation, food, health care and other services. If the new measures pass, they would be the largest of their kind in the state.

Proposition S would levy a 5-cent property tax on every $100 of assessed value, which boils down to $9.50 a year on a home worth $100,000. Local boards would decide which needs are a priority for residents who are at least 60 years old.  (Post-Dispatch) 

I’ll probably vote yes on this. It is often better for seniors to be able to stay in their homes as they age — it’s also cheaper on taxpayers.  This is a good investment, assuming the local boards are well-managed. This is on the ballot because of Seniors Count St. Louis.

Proposition A/Constitutional Amendment 3 — cigarette/tobacco taxes

Regular readers know I’m a non-smoker who supports prohibition of smoking in public. I’ve also pointed out how low Missouri’s cigarette taxes are compared to neighboring states. So, you might think I’d be happy to see two ballot issues that raise taxes on cigarettes/tobacco. Wrong.

The campaigns behind both of the competing tobacco tax increase measures on the ballot were largely funded by tobacco companies. Large tobacco companies, in general, backed Amendment 3, the 60 Cent Cigarette Tax Increase Initiative, while some smaller companies and wholesalers supported Proposition A, the smaller tax increase.

Reynold’s American Inc. gave over $2 million to Raise Your Hand for Kids, which is supporting Amendment 3, the 60 Cent Cigarette Tax Increase Initiative. The drafters of Amendment 3 included a 67-cent-per-pack fee on wholesale tobacco sellers, raising the total state tax for smaller companies to $1.27 per pack. This added tax for small companies was designed to close an alleged loophole that allowed small companies to evade making payments to 46 states mandated by a multi-state court settlement to help offset Medicaid costs. Missouri Attorney General Chris Koster had been pressuring the Missouri General Assembly to end this loophole and demand lost payments from small companies totalling $50 million annually.

Smaller companies such as Cheyenne International, LPC Inc., and Xcaliber International donated toward the Proposition A, the 23 Cent Cigarette Tax Increase Initiative, largely to oppose the Amendment 3. Chuck Hatfield, lawyer for Cheyenne, said that the Amendment 3 was “about Big Tobacco wanting to tax their competitors. That’s what this has always been about.” (BallotPedia)

Given this information, I’ll be voting no on both.

Constitutional Amendment 6 — Voter ID

Voter ID laws in other states have been controversial and ruled unconstitutional, but that didn’t stop the Republican-controlled legislature from overriding the veto to place this on the ballot. Their intent is very clear — discouraging/preventing African-Americams from voting. Period. What about the 78th House Dist race?  A voter ID wouldn’t have made a difference, the St. Louis Board of Elections had created a secondary process for absentee ballots that was abused.

In January a Missouri State Senator argued in favor of such a law:

Kraus said Missouri needs a voter I.D. law because there have been more than 16 cases of “some type of voter fraud” in Missouri. That number isn’t wrong, but it doesn’t support Kraus’ assertion that photo identification would solve the problem — or that there is a problem of people impersonating voters.
Kraus’ statement is partially accurate but takes things out of context. We rate his claim Half True. (PolitiFact Missouri)

I’ll be voting no.

Constitutional Amendment 4 — banning new sales/use tax on services

More states are looking to tax services, so some in Missouri are trying to stop it from happening here:

Could Missouri tax haircuts, veterinary services, pedicures and yoga classes? Missouri voters will have their say this November at their polling place with Amendment 4.

The “Taxpayer Protection Amendment” was certified for the ballot this month. If approved by voters it would ban a sales tax on services.

The amendment would prevent the state from taxing such services as car repairs, tattoos and lawn care. 

Currently, consumers don’t pay taxes on those services. Inconvenienced travelers pay a sales tax on a new tire but not on the service of replacing a flat.

But despite Missouri’s current lack of a sales tax on services, Amendment 4’s supporters – primarily the Missouri Association of Realtors, which circulated the initiative petition – see trouble on the horizon. (Missouri Times)

Taxing service transactions could be a headache for those providers, but this might also help budgets in areas heavy on service but low on retail. Hmm…

Retired financier Rex Sinquefield is a potential adversary, especially because he’s advocated for replacing Missouri’s income tax with an expanded sales tax. An e-mail to one of Sinquefield advisors wasn’t returned about whether he’d actively oppose Amendment 4. (St. Louis Public Radio)

This might force sales taxes to go up even more — an unintended consequence. I’m not sure yet how I’ll vote on this issue.

Constitutional Amendment 2 — campaign limits

Big money flowing into politics is something I generally favor trying to limit/stop:

The measure would cap donations to candidates at $2,600 per election and to political parties at $25,000. It also would impose other campaign finance restrictions aimed at preventing political committees from obscuring the source of their money.

In November 1994, 74 percent of Missouri voters approved a ballot measure limiting contributions to state candidates. The Republican-led General Assembly repealed contribution limits in 2008, which at the time stood at $1,350 for statewide candidates, $675 for Senate candidates and $325 for House candidates. (Kansas City Star)

Even though the person behind this is anti-abortion, I’ll likely vote yes.

Constitutional Amendment 1 — renew tax for soil/water conservation

This measure has been renewed in the past:

Amendment 1, upon voter approval, would renew the existing sales and use tax of 0.1 percent for 10 years. The revenue from the tax goes toward conservation efforts, and the measure was designed to “continue to generate approximately $90 million annually for soil and water conservation and operation of the state park system.”

Constitutional Amendment 1 was automatically referred to the 2016 ballot. This measure originated with a 1984 constitutional amendment. Due to the wording of this original amendment and subsequent iterations, the measure must be reapproved by voters. It is automatically referred to the ballot every 10 years. Previous versions of this amendment were approved in 1988, 1996, and 2006. If Amendment 1 is not approved in 2016, it will not be referred to future ballots. (BallotPedia)

I’ll vote yes to continue this tax.

Next week I’ll post on judges up for retention.

— Steve Patterson