JEFFERSON CITY — Proposition A seeks to limit the ability of Missouri cities to enact earnings taxes on personal and business income.
Should Proposition A pass, two things would occur:
Shall Missouri law be amended to:
- repeal the authority of certain cities to use earnings taxes to fund their budgets;
- require voters in cities that currently have an earnings tax to approve continuation of such tax at the next general municipal election and at an election held every 5 years thereafter;
- require any current earnings tax that is not approved by the voters to be phased out over a period of 10 years; and
- prohibit any city from adding a new earnings tax to fund their budget?
The proposal could eliminate certain city earnings taxes. For 2010, Kansas City and the City of St. Louis budgeted earnings tax revenue of $199.2 million and $141.2 million, respectively. Reduced earnings tax deductions could increase state revenues by $4.8 million. The total cost or savings to state and local governmental entities is unknown.
1) St. Louis and Kansas City — the only cities with such a tax — would have to allow voters in April 2011 to decide whether to continue their 1 percent taxes on income and business revenues. The taxes also would be subject to a vote every five years thereafter. If voters in either city elected to abolish the tax, it would be phased out over 10 years.
2) All cities other than St. Louis and Kansas City would be prohibited from enacting an earnings tax.
Proponents of the measure say that the voters of St. Louis and Kansas City have not had a chance to vote on the earnings tax in decades and that Proposition A gives them that chance. They also say that it would make the cities more economically competitive.
Opponents say the measure would have the opposite effect and would take the authority to determine tax policy out of the hands of municipal authorities. They also say St. Louis and Kansas City probably would have to raise property or sales taxes if earnings taxes were abolished. Higher sales taxes, they say, would shift the tax burden disproportionally onto the poor.
St. Louis and Kansas City budgeted for $199.2 million and $141.2 million worth of earnings tax revenue in fiscal 2010 respectively, according to the Missouri Secretary of State.