Jo you left out the best part of Sarah’s day, the part where she had no clue how to replace the revenue lost by cutting the tax. But then again, she didn’t know that question was coming, she couldn’t have anticipated that any reporter would ask such an out-of-left-field question and Tony certainly didn’t ask that very question almost a week ago. Oh wait. That should have been the first answer her staff force-fed to her and Tony did ask that very question on April 30th. Well maybe after another week Doug, James and Spence will have figured out an answer.

I am glad to see that Sarah was combining official activities with campaign activities, just like how her staff combines official work with campaign work.

Let me see if I understand, Steelman has made a proposal to eliminate the much hated by everyone earnings tax. She has not proposed a top down, state government one size fits all solution to the earnings task but has instead, gasp, said that the state needs to work with the locals on developing a replacement. Because she has not come up with a mandated replacement, she is clueless.

It doesn’t sound like she is the one who is clueless.

nelson…

Jo probably left that part out because that question would have been as ridiculous to publicize it as it was to ask.

Removing the tax would result in more businesses and people coming to the downtown area, therefore generating more income from sales tax.

I think Sarah’s lack of response to the question was likely due to biting her tongue to avoid such.

When you get rid of a tax that is having an adverse effect, you don’t need to replace it with another tax. Sometimes removing the stick from your eye, because it is blocking your vision, is all that is needed to see again. There is no reason to replace it with another stick, just because you are used to having a stick in your eye.

Lowering the price results in increased sales. The volume of increased sales outweighs the price reduction resulting in more profit. Do you think stores drop their prices on select items to lose money? The reduced price results in more traffic. In the long run, the store makes more money.

I’m glad Tony Messenger is a journalist and Sarah Steelman is an economist. When it comes to figuring out how to make money to support our government, I think I’ll leave that in the hands of the economist.

JACKSON: This is by definition top down since she’s the one here crowing about it. City officials have shown little or no interest. St. Louis’s economy has been steadily improving for 5-7 years until the recent real-estate slow down which is nationwide and not the fault of St. Louis’s earnings tax.

Or Denver’s.

Or Columbus’s.

Or Cincinatti’s.

Or New York City’s.

Or San Francisco’s.

Or Philadelphia’s.

Or Baltimore’s.

Or KC’s.

Or Detroit’s.

Or Portland’s.

Or Pittsburgh’s.

JIM: We’re not talking about sales tax silly.

And to replace $300M with sales tax…excuse me..hahahahahahahaha!!!

That would only require selling an extra $30,000,000,000….that’s BILLION…worth of goods annually in the City of St. Louis. That’s over 12% of the entire State of Missouri GDP.

But seriously…good idea.

commuterspaytoo…

Sorry, I had to head out and didn’t fully complete my thoughts. Sales tax would not be the only revenue source.

I know what we’re talking about. We’re talking about removing the earnings tax to generate an incentive for more businesses and people to move to the city.

When more businesses move to the city, more people follow. That causes even more businesses to move to the city. People want to live, shop, and dine, reasonably close to where they work (especially with high fuel costs).

The people and businesses that move to the city want to live and work in nice places which causes more building and renovation in the city. That’s where the city can recover the lost income from removing the earnings tax without creating a new tax that would discourage people from shopping and relocating to the city. The city can assess a tax on the increased value of the property. The dramatically increased value of the property would offset the tax increase.

All of this creates income for the city to offset the loss of revenue created by the earnings tax.
One tax would need to be phased out while the other is phased in.

I’m not an economist, but it makes sense to me.

I knew that I had read something about this somewhere.

Joseph Haslag of the Show-Me Institute wrote a good article about it back in January of 2007. He was referring to Kansas City, but the same principles could be applied to Saint Louis.

Here’s a link:
http://showmeinstitute.org/publication/id.43/pub_detail.asp

Mr. Haslag calls it a two-tiered land tax. I aoplogize if my incorrect terminology led to any confusion.

JIM; The article you site REPLACES THE TAX!!!! THE LAND TAX IS NEW!!! A new land tax replaces the earnings tax, with its percentages rising while the earnings tax percentages decrease.

This is ridiculous.

You think sending Anheuser-Busch a land tax bill of $1,000,000 in year 1 is going to encourage businesses to relocate here?

JIM: After further review another flaw in Haslag’s KC example is that it doesn’t consider the increase in land being removed from tax rolls by Non-profit entities. In St. Louis Washington University and St. Louis University have taken over $3 BILLION worth of property off the tax rolls. Granted only a couple hundred million of that is land but it shows that the supply of developable and taxable land is not necessarily inelastic with large non-profit players in the mix.

commuterpaytoo…

I’ll trust your numbers.

What do you suggest the city do? Should they just continue the earnings tax? Is it fair to tax those who work in the city? Is it a deterent?

When big business comes into the city, they get tax breaks, but their employees pay more to help subsidize the city.

I’m open to suggestions.