Thanks to the personal beliefs and vast wealth of one man, billionaire Rex Sinquefield, St. Louis voters must once again go to the polls and vote to continue funding their government and avoid the potential economic disaster that eliminating the city’s earnings tax would bring. As we did in 2016, we urge voters to approve Proposition E on April 6 to extend the earnings tax.
Why must St. Louis city residents vote every five years to continue the earnings tax, which comprises one-third of the city’s budget? Because in 2010, Sinquefield, the retired investor and conservative megadonor, spent nearly $11 million to put a measure on the statewide ballot outlawing local earnings taxes, except in St. Louis and Kansas City, where they were already levied. That measure, which passed easily thanks mostly to Missouri’s rural voters, requires residents of the state’s two largest cities to vote every five years to reauthorize the tax.
In 2011, the first year of the vote, Sinquefield spent very little to support his own idea, and nearly 88% of St. Louis city voters voted to keep the earnings tax. In 2016, despite Sinquefield dumping more than $2 million into an anti-earnings tax campaign, 71% of voters overwhelmingly supported keeping the tax. For Round 3, the billionaire has once again sat out the fight, perhaps realizing just how devastating it could be right now to an already unstable city budget ravaged by the pandemic. But nonetheless, the city leaders are taking nothing for granted.
Mayor Lyda Krewson, who will be leaving office just two weeks after this critical vote, and Collector of Revenue Gregory F.X. Daly are leading the campaign to educate voters on the importance of this revenue stream, which generated about $180 million last fiscal year. If the earnings tax — a flat 1% tax on the paychecks of everyone living or working in the city — was to be eliminated, that revenue would have to be made up in higher sales and property taxes. Krewson and Daly also argue it would jeopardize funding for police, firefighters and other essential city services.
Sinquefield and his team never came up with a convincing argument about how St. Louis and Kansas City should replace the revenue generated by the tax. They instead relied on faith that the free market would simply work it out. St. Louis is in no position to make such a gamble. And while earnings taxes might provide some disincentive to living and working in the city, higher sales and property taxes, further economic instability, and potential massive cuts to city services are even bigger disincentives. Once again, we urge city voters to vote “yes” on Proposition E to retain the city’s earnings tax.