Show-Me Pocket Change

While the removing the earnings tax raises serious concerns about how St. Louis will fund services, the St. Louis Post-Dispatch has aptly framed the conversation about why it needs to come under scrutiny.

They discuss the earnings tax as a burden on city businesses and individuals to solve the region’s larger sustainable growth (and, by proxy, issues of ongoing disparity, poverty and safety that are truly intertwined).

St. Louis levies a 1 percent tax on the earnings of workers who live or work in the city, and a one-half of 1 percent tax on city employers’ payrolls. It is the primary means by which people who live and work in the city do the heavy lifting for the St. Louis region — essentially funding what Ms. LaSala characterized as the region’s “social loophole.”

Public safety is the main purpose to which the funds ultimately are put. They are used to field what is by far the region’s largest law enforcement agency, to suppress crime that affects the wider region and to promote order and safety the region’s biggest business district and greatest cultural venues.

The earnings tax, in other words, really is a public safety tax. The $141 million collected annually roughly is equivalent to the budget of the St. Louis Metropolitan Police Department. It represents 39 percent of the city’s $366.5 million in general fund income.

Eliminating it without some form of replacement “would result in cuts to public safety services so deep as to end the City’s viability as a place to live, work and visit,” according to the fiscal note the city sent to in response to Mr. Sinquefield’s initiative petitions.

Eliminating the earnings tax would, in effect, be a stark message from the city residents and workers. They’d be telling the rest of the region: On matters of regional public safety, “we can’t take care of this for you any more.”

We don’t agree that the effect of the earnings tax on the city’s business climate is as negative as Mr. Sinquefield suggests. But it has some negative effect; if you can locate an office in Clayton or downtown, why not choose Clayton and save the 1 percent?

The e-tax has been an “enabler,” preventing the wider region from facing up to its shared problems. It has placed a disproportionate and unfair burden on city businesses and taxpayers in funding police services that provide benefits and stability to the entire region.

Even with the earnings tax, St. Louis is losing its ability to sustain the leading financial role in regional public safety. The city expects to face a $45 million shortfall in the budget year beginning July 1. Bridging it will require painfully deep cuts, approaching 10 percent. As the city’s largest single budget line, the police department will have to absorb some of those cuts.

This starts a good discussion. I think most earnings tax payers don’t understand what the earnings tax funds, and hopefully examining it will bring its strict purposes to light.

I imagine most people don’t think they have a choice, as with most taxes. But challenging the city to provide alternatives that allow and promote growth puts the people of St. Louis back in charge. It’s a way for voters to say: “You serve us, not the other way around.”