This is the second part of a series of posts which will analyze the issues on the ballot in Missouri and in Columbia.
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.
Proposition A is being framed as a local control issue, with opponents arguing that it would prohibit cities from taking on a new source of revenue if they so choose. While in principle I agree with the idea that most policies should be made at the lowest level of government possible, that principle is outweighed by the fact that the income tax has already become too pervasive in our country, and stopping it from expanding at the local level is a step closer to rolling it back completely.
The other thing I like about this initiative is that it requires that the people in the cities that already have an earnings tax — St. Louis and Kansas City — be given the opportunity to vote on whether or not to retain the tax every five years. This gives citizens some say in their taxation and whether or not they feel like they are getting their money’s worth from their government (my guess is that the answer is no).
The measure would eliminate a deduction for people affected by the earnings tax on their state tax returns, and raises the local control issues I mentioned before, but the opportunity to strike a blow at the income tax, even in a small way, is one that shouldn’t be wasted.