People normally don’t rally to keep taxes in place, said St. Louis Comptroller Darlene Green at an Oct. 23 Prop A rally in Tower Grove Park.
But those who oppose eliminating local income tax in the cities of St. Louis and Kansas City, as Proposition A aims to do, are smart enough to understand that the proposition would hurt city services, such as the police and fire departments, Green said to some 70 supporters at the rally.
On Nov. 2, Missourians will vote on Proposition A, a ballot initiative funded by retired billionaire financer Rex Sinquefield. If Prop A passes on the statewide ballot on Nov. 2, then voters in St. Louis would be forced to vote next April on whether to retain or sunset the city’s one percent earnings tax. If voters refuse to give up the city’s earning tax, the issue will come up again for renewal in five years.
In St. Louis city, residents and people who work in the city pay an additional one percent income tax on their earnings. For this fiscal year, this local income tax is expected to generate $137.5 million, said Green. That is almost one-third of the city’s general fund budget.
“It’s a fair tax,” Green said at the rally. “Did you know that at least 40 percent of the people who work in St. Louis live outside of the city? It’s a fair and balanced way for the working public to pay for the infrastructure that they use everyday.”
The rally was organized by St. Louis Area Jobs With Justice, a coalition of student, community, labor and religious groups committed to economic justice. On a warm fall afternoon, 150 canvassers went knocking on doors and educating voters throughout the city and St. Louis County, following the rally.
Paula Simpson, a local Service Employees International Union member and shop steward at a local nursing facility, was one of those who hit the streets Saturday.
“It affects my city, and I’m in the heart of St. Louis,” Simpson said. “If it benefits the city services, I have no problem paying the earning tax. I’m all for it. I don’t want it to go away.”
Terran Abram, who was also canvassing with SEIU, worries about how eliminating the tax would affect public protection.
“If we cut firefighters and police, this city is going to go chaotic and we can’t have that,” Abram said.
Aldermanic President Lewis Reed also spoke at the rally, though until recently he had not publicly opposed Prop A.
“This puts a lot at risk,” Reed said. “Can we afford to have more services cut in the city?”
Mayor Francis G. Slay has received significant contributions from Sinquefield, who is Slay’s single largest campaign donor. In direct contrast to his counterpart in Kansas City, Mo., Mayor Mark Funkhouser, Slay has been quiet about this critical vote on Nov. 2.
Slay’s chief of staff Jeff Rainford has said he has been telling business leaders in St. Louis that Kansas City is throwing its money away fighting the statewide initiative.
Sinquefield has spent more than $10.7 million on the campaign to pass Prop A.
Replacing a tax with more taxes
If city government were to lose its local income tax, it would have to triple its current local general revenue sales tax from 1.375 percent to 5.3 percent, according to Amy Blouin, executive director and founder of the Missouri Budget Project.
That means that sales tax could be as high as 13.166 percent, depending if the area is a special taxing district. For every dollar a person spends on groceries, he or she would pay 13 cents, instead of the current 8 cents. If that person spends $100 on groceries a week, that’s $20 more in taxes a month for food.
For sit-down restaurants, there is currently a 1.5 percent sales tax added to the current 8.241 percent. To compensate for the lack of local income tax, restaurants would have to charge up to 14.66 percent sales tax.
The other anticipated source of expanded revenue would come from increased property taxes in the city.
In Sinquefield’s Show-Me Institute studies, researchers show that the U.S. states that don’t have income taxes, such as Texas, Nevada, Florida, Tennessee and Washington, achieve higher economic growth.
Of those nine states that Sinquefield touted as having impressive economic growth and no income taxes, the Institute on Taxation found that Tennessee, Texas, Washington, Florida and Nevada were in the top 10 U.S. states that put the highest tax burden on their poorest residents.
These states ask their poorest residents – those in the bottom 20 percent of the income scale – to pay up to six times as much of their income in taxes as they ask the wealthy to pay.
“It’s important that the citizens have input on the police department and fire department,” said Elmer Muhummad, SEIU member.
“Corporations want to privatize services and drive up the property tax and sales tax. We feel that’s a gross injustice on the part of the corporations and particularly Rex Sinquefield.”
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