At STL Rising, we try to focus on the positive things going on in St. Louis. One topic that has been a long time challenge for the city is the 1% earnings tax. It's a simple enough thing-live or work in the city, and pay 1% of your gross pay to the City of St. Louis.
The City needs the money. The earnings tax provides a major part of the City's general revenue. Lots of people will say that as much as we wish we didn't have it, there's no way we make it without it. Well, I've been giving this some thought, and you know something, maybe there is.
Sure, there's no way we could say, drop the earnings tax this year and replace it with a property tax. Some argue for a "land tax" (a tax on vacant land), and maybe that'd help some. But it's questionable whether that'd replace all the revenue from the earnings tax. Here's another idea...
The city is growing. We are working to attract jobs, and we are building housing. The city is working to increase its tax base. As tax abatements run their course, real estate taxes can increase. And as employment grows, we get more people paying earnings taxes.
Okay, so I'm not an expert on this, but I think the city budget is something like $350,000,000 per year. What if we set a ten or fifteen year goal to remove the earnings tax? And lower it a little each year for the next ten or fifiteen years?
Say in 2008 we went from 1% to .9%. It would be just a little, but it would be a step. Then see how the budget goes. Apply the decrease to all workers-not just new employees. Then say in 2010 lower it again, say to .8%
Meanwhile, we keep working to draw more residents and jobs to the city. More residents and more jobs mean more economic activity, and more revenue flowing to the city. So say in 2012, we lower the earnings tax again, say to .6%, and so on.
Who knows? Maybe by 2020, the earnings tax is worked down to zero, the city's population reaches 450,000, and our workforce is 50% larger than it is today.
And we could start working towards a shared civic goal with a tiny 1/10 of 1% reduction in the rate of our current earnings tax. Any takers?