Forget fentanyl, oxy, and crack. The most powerful drugs damaging St. Louis and America are selfishness and stupidity. And the cut-taxes-at-any-cost movement is a CDC-worthy epidemic of both.
States like Kansas and Oklahoma both decided to be economic drug labs, cranking out as many tax cuts as possible. What’s happened? Many school districts in Oklahoma are on four-day weeks because there’s not enough cash to operate public schools. In Kansas, the disastrous experiment in tax cuts slashed money for roads, schools, and agriculture. Job growth tanked. Economic output fell. But at least the rich got richer.
But wait, the tax-cut slingers bray, look at Texas—low taxes, and the second biggest state economy in America. Which is true enough, if you don’t let facts get in the way. Over 40 percent of Texas’ economy comes from oil. They could cut taxes because of the geographic accident of squatting atop the world’s eighth largest oil reserves. And a lot of Texans end up paying more in taxes, due to sales and excise taxes that help make up for the lack of an income tax. Those sales and excise taxes, of course, hit the working and middle classes hardest.
Now, the low-tax dope peddlers have arrived here, in the form of the Better Together plan to unify St. Louis city and county into one big metro city of 1.3 million people. Uber-libertarian and billionaire Rex Sinquefield funded the proposal. And while there’s a lot about it to like, Sinquefield’s years-long jihad against the city’s earning tax is part of the plan’s framework.
If unification ever did take place under the Better Together blueprint, the city’s one percent earnings tax would be phased out over a few years. In doing so, Better Together made a right-wing ideological choice. Instead of expanding the earnings tax to the entire new metro city, creating millions of new dollars for everything from cops and transit to roads and education, organizers decided instead to eliminate the tax.
This is both bad governance and lousy economics. Sinquefield and his fellow tax-slashers in Missouri have always reacted to the one percent earnings taxes in St. Louis and Kansas City like vampires contemplating a wooden stake and a necklace of garlic bulbs. But their faux horror is just a show for the anti-tax rubes in the cheap seats.
What we call the “earnings tax” the rest of the country calls a “city income tax.” Not only is it an economically sensible way to help run a city, St. Louis’ tax is one of the lowest around. Far from being some sort of anomaly, a city income tax is used reasonably by successful cities across the country, almost all of whom tax at a much higher rate than St. Louis.
New York City’s earnings tax/income tax runs between 3 and 3.5 percent. Washington D.C.’s runs between 4 and 8.5 percent. Detroit’s is 2.5 percent. Philadelphia’s is 4 percent. Pittsburgh’s is 3 percent. Baltimore’s is 3 percent. Louisville’s is 2.2 percent, Cincinnati and Cleveland are at 1 percent, and Portland’s is 0.6 percent for individuals, 1.45 percent for businesses. Every one of Indiana’s 92 counties levies a county income tax.
St. Louis’ earnings/income tax generates around $164 million a year, about one-third of the city’s entire general revenue fund. An earnings/income tax of one percent applied to the proposed Better Together metro city would probably generate somewhere in the neighborhood of $600 million every year, putting the new city on a firm financial footing and allowing it to invest in things like mass transit in an era where aid from both the federal and the Missouri state governments for transit projects is close to zero.
It could fund repairs to local infrastructure. It could pay for educational programs. It could make the metro city attractive to outsiders simply because growth (expect in the case of oil-lucky Texas) among younger workers and families isn’t fueled by swim-to-the-bottom tax rates. Growing areas are the ones with robust infrastructure, well-funded education programs, and a quality of life based on public investment in public programs.
Right-wingers sniff that places like California are high-tax hellholes. No, California is the world’s fifth biggest economy, home to a collection of universities among the world’s finest, and headquarters of the digital future for the entire planet. Compare that to the economic and educational hollowing-out of Kansas’ low-tax paradise, and the consequences of being either too selfish or too stupid to link reasonable taxation with economic prosperity are clear.
Better Together, though, decided to eliminate the earnings/income tax for what seem to be purely ideological reasons.
I asked Better Together spokesman Dave Leipholz why the group went along with Sinquefield’s opposition to the earnings tax rather than expand it to raise a reliable income stream for the proposed metro city.
“The earnings tax is not just unpopular with one person,” he said. “If you look at it from the perspective of the business community overall, it’s been a challenge for them to get people to locate downtown. But I think the biggest reason is we don’t need it.”
Leipholz claimed just in the first year of unification, getting rid of city offices that serve county functions will save around $60 million. But when pressed on why the decision was made to get rid of the earnings tax rather than expand it, the masked slipped a little bit.
“Because,” he said, “I think one of the things people in the region want to see is more efficient government. That’s something we’ve been talking about for a long time.”
Well, it’s something Sinquefield’s been talking about. Not “efficient” as in “let’s make it easier to get building permits” but “efficient” as in “let’s cut the size of government.”
Getting rid of the earnings tax in any new metro city is a mistake that only appeals to the stupid, the selfish, and the Sinquefield rich.
Charles Jaco is a journalist, author, and activist. Follow him on Twitter at @charlesjaco1.