The St. Louis city payroll tax paid by employers is unconstitutional and the courts should toss it out, according to a lawsuit filed Monday.
The suit says the tax was never authorized by the Missouri Legislature, and that the city had no power to impose it.
The suit challenges the 0.5 percent tax that city employers pay on their payrolls. It doesn’t challenge the 1 percent tax that workers pay on their earnings in the city. That tax on workers was allowed by a state law, according to the suit.
The suit argues that the Missouri Constitution forbids cities from imposing taxes that aren’t authorized either by the constitution or state law.
Plaintiffs in the suit are General Marine Services and Thomas Joseph Neuner, an attorney and financial adviser. The suit was filed in St. Louis circuit court by attorney W. Bevis Schock of Clayton.
The payroll tax on employers is expected to raise about $32.8 million in revenue this year, according to Maggie Crane, spokeswoman for Mayor Francis Slay. By comparison, the earnings tax provides $164 million of the city’s $493 million in revenue. The earnings tax is paid by city residents and commuters who work in the city.
The suit also challenges the city’s practice of giving payroll tax refunds to certain companies that improve their properties. Two of those companies, health insurer Anthem and the Polsinelli law firm, were also named as defendants.
Anthem in 2009 was granted tax breaks after it agreed to keep its regional headquarters downtown, spending $4.5 million to improve its Chestnut Street building and move 300 employees to the city from Creve Coeur. The city allowed the company to keep half the payroll taxes from those 300 workers, and granted a 10-year property tax abatement.
Crane said the city attorneys hadn’t yet seen the suit and were reserving comment. An Anthem spokeswoman declined comment. Polsinelli officials were not immediately available.