Readers on earnings taxes
Last week I posted about an effort to eliminate local earnings taxes (The question of earnings taxes). The discussion in the comments was deep, diverse and divided. This post introduced the reader’s poll for the week. First the results and then I’ll share my thoughts.
Q: Should Missouri take away the authority of St. Louis to collect individual earnings taxes?
- No, too critical to the St. Louis’ budget to eliminate 94 [42%]
- Yes, phase out over a 10 year period 39 [17%]
- Yes, where there is a will there is a way 27 [12%]
- Yes, new taxes would make up the difference 18 [ 8%]
- No, just keep the earnings taxes in Missouri 14 [6%]
- Yes, St. Louis should cut city services to deal with loss of revenue 10 [4%]
- Unsure 8 [4%]
- Other answer… 8 [4%]
- Yes, if they give us back control of our police dept. 5 [2%]
The “other” answers given were:
- With specific authority for the replacement revenue source(s).
- phase in a $100 K cap.
- Stop giving tax abatement to $800K houses on the Hill
- No. In fact, expand it to cover all of Missouri!
- Phase out over a three year period
- Jane Jacobs prefers cities tax themselves, not divert the money to rural places.
- implement an earnings tax in St. Louis County
- find alternative funding source first
In my 19 years in St. Louis the 1% never once bothered me. But as the poll and comments show, the views on the issue are wide-ranging. These different views are the significance of the topic. More than half the 223 respondents favored a change.
Slay said he’s opposed to any statewide ballot proposals that would do away with the 1 percent tax, even with a 10-year phaseout period, unless the matter is left up to voters in the city of St. Louis.“If it allowed the voters of the city to decide the matter, and if voters subsequently decided they wanted to replace the tax with something else, and if it gave us a decade to come up with a solution, I would support it,” Slay wrote in a lengthy entry today on his blog.
He also made clear that he opposes one tax alternative — a land tax — that has been floated by wealthy financier Rex Sinquefield, who is behind the various initiative-petition options that have been approved for circulation by the secretary of state’s office. The aim of Sinquefield and his allies is to collect enough signatures to get at least one of the proposals on this year’s November ballot. [St. Louis Beacon, Slay says regional changes necessary before city earnings tax could be ditched]
Eliminating the city’s right to collect the tax without any other changes would certainly be a recipe for disaster. Revenue, city services, population and jobs, would decline. But doing nothing continues to set the City of St. Louis apart from the rest of the region. So what do we do?
As I see it we have several courses of action:
- Change nothing, keep everything as is.
- Begin phasing out the earnings tax and deal with the consequences (other taxes, reduced services)
- Or restructure the City of St. Louis top to bottom
#1 above is the likely route favored by St. Louis natives as it doesn’t involve change. The anti-tax types would go for #2. My preference is #3. a complete restructure.
What does a restructure look like? In my view we’d look at every policy, procedure, and position in every aspect of city government. We’d toss out everything and start anew. We might bring in some of the old but only after exploring all choices and determining the old way is the best way based on current conditions. Given this approach, we might emerge with an earnings tax. It might be be reduced for non-residents. It might be expanded throughout much of the region (huge task). We need to get rid of the city’s excess baggage.
Why such a radical restructuring? As we can see from the nearly 20 audits conducted by Missouri Auditor after a petition by the Green Party, all sections of government have oversight issues:
- St. Louis Board of Police Commissioners, Nov 2009
- Dept of Public Safety, Nov 2009
- Lambert-St. Louis International Airport, Nov 2009
- Office of the License Collector, June 2009
- Dept of Streets, June 2009
- Office of Collector of Revenue, June 2009
- Dept of Human Services, June 2009
- Lead Safe St. Louis Program, June 2009
- Dept of Health, June 2009
- Community and Economic Development Offices, April 2009
- Information Technology Services Agency, April 2009
- Office of Treasurer, December 2008
- Dept of Park, Recreation and Forestry, December 2008
- Office of the Comptroller, December 2008
- Board of Aldermen, September 2008
- Dept of Public Service, September 2008
- Supply Division, September 2008
- Dept of Personnel, Sept 2008
I don’t for a minute believe then men that governed the city 50-60 years ago made decisions that we should be expected to keep around long after they have passed. Ongoing evaluation and change to adjust to new circumstances is logical. We don’t do that, unfortunately. Instead various interests pick away one issue at a time.
The word “Mayor” is etched in stone above the door to room 200 in City Hall so I’d keep the office of mayor, besides every city has a mayor. I don’t recall if Board of Aldermen or other offices are also etched in stone. Even if they are, we are still be free to change how our government is structured, including the names of elective offices.
So no, I don’t want to pluck out one tax and call it a day. I want to get a fresh start for the 21st century.
– Steve Patterson
I'd be very wary of consider this option. Here in Milwaukee the city basically can raise property taxes and/or fees and that's about it, so we have high property taxes. If anything it would be better for cities to be able to diversify the revenue streams so no one item gets out of wack. So that's why I wouldn't remove this revenue stream from Milwaukee.
Post Dispatch has an article about city cutting back to weekly tash service that is paid for in part by earnings tax. That is going to play well with us who happen to pay for our own trash service as well as having family that work in the city that are also paying for these services.
I agree about revamping the whole city structure. It seems that the current structure encourages nepotism/cronyism and a do-nothing attitude that has done nothing to help the city grow and change. As far as the earnings tax, a lot of other metropolitan areas charge a head tax of $5-$10/month/employee which is used to cover the wear and tear on infrastructure. While it wouldn't cover the amount lost with abolition of an earnings tax it does start to add.
It would be interesting to compare St. Louis city tax rates with those of other cities that are growing in population and attracting businesses.
Having made some of those comparisons myself, there really isn't a discernible pattern. There are lots of variables and cities are quite different. Many of the cities that were growing during the fifty years that the St. Louis was in decline have the highest rate of taxation, e.g. New York, Boston, San Francisco. But these cities benefited from immigration, some unique qualities (in New York the financial industry, Boston with high tech and higher education, San Francisco with silicon valley and access to the Pacific Rim), and other natural advantages. Other cities in the sunbelt where taxes were low grew rapidly, but often having populations that had a smaller need for the range of services of a more diverse and older city (lots of retirees and undocumented immigrants). It's an intellectual trap to generalize that low taxes means high growth. There is simply no evidence for that. I've always maintained that it's not how much we pay in taxes that's important — it's what we get for what we pay that really matters. So if we pay high taxes and get poor services, that is indeed a bad combination.
I think we (can?) all agree that this was not a scientific poll. One, this is a self-selected, not random, sample. Two, a single question cannot address the complexity of the issue. Three, the possible answers are more “push poll” than “yes” or “no”. And four, the conclusions extrapolated out (1, 2 or 3) are a leap from the questions asked and the response choices offered. That said, I appreciate having all the responses recieved laid out for our consideration.
On the previous post, I was vocal participant; I'm not going to rehash all the points I made. I do disagree with your conclusion that we need to “restructure the City of St. Louis top to bottom”. Yes, there are areas of weakness, and yes, the auditor has identifed many of them. But my take is that the real issues are more cultural than structural. Changing the structure of the Police Department, from state control to local control, for example, will likely result in little real change in crime statistics or the day-to-day operation of the department. The politics at the highest (chief) level would change, somewhat, but the politics further down the food chain would remain the same unless 25 or 50 officers were forced out and whole new leadership structure installed. The same holds true pretty much anywhere else on the city's organization chart.
The fundamental problem with the city is economic and demographic – we've lost jobs and population, and we've become smaller and relatively poorer over the past 50 years. We live in a global and a regional economy; competition has increased. Increased poverty and increased crime rates are also usually tied together. There's only so much any government can do to change this dynamic. We all struggle (citizens and government) with a depressed local economy, and “fixing” that would do more to improve our future than investing a huge amount of energy in reconfiguring city government or “changing the names over the doors” – the expression “rearranging the deck chairs on the Titanic” comes to mind.
The one entity that does appear to call out for new structure is the St. Louis Public School system. Earlier this week, Elliott Davis pointed out that there are nearly two dozen administrators in HQ making more than $100K annually. The one appointed board member interviewed did not see this as any sort of problem. This, in a system with declining enrollment and “disappointing” test results and graduation rates. The school system is a problem at multiple levels, and fixing it will do more to reinvigorate the city than any changes to our tax structure.
Finally, remember that the auditor is an elected position and a political animal. They're supposed to identify potential (or actual) problem areas, and, many times, minor issues are potrayed as major ones. The bottom line, in spite of our budget struggles, is that the traffic lights work, the trash gets picked up and our parks continue to be maintained. Is it perfect? No, it will never be, given the tension between service demands and the electorate's stomach for taxes, new or old. . . .
Actually Jim, re. the operations of the police department, there would be significant change and cost savings. At this time the police department has many parallel function of city government. This quote is from the Mayor's
website:
“The Police Department is one place we could look for savings, if the General Assembly gave the City local control. Right now, between the City and the Police Department, there are two sets of everything. Two sets of lawyers, two sets of communication teams, two sets human resources people. Merging the civilian functions of the police department into City government could save taxpayers millions of dollars.”
I don't know enough about the line items in the their respective budgets to agree or disagree on the financial impact. My point is that it's very difficult to legislate cultural changes. Aldermanic courtesy and tolerating dishonesty in the Police Department aren't written into any ordinance, it just “happens”. The real, and only, solution is to put better people in positions of responsibility. As voters, we need to research the candidates, elect the best ones, and to continue to watch them once they're in office. We have the power to fire them if we're not happy with what they're doing; if the majority of us decide to keep them, then they must, by definition, be the best we can get . . .
While there is little doubt that the police department, like most governmental operations in our region, could be operated at a lower cost, that should not be the primary objective. Rather, our objective should be to make the City safe. It could be that cost savings might be applied to getting more cops on the street or to some other expenditure or strategy to achieve the objective of public safety. Same with our public schools. Our objective is to prepare young people to participate in our economy and our community, not to operate the school system with as little public funding as possible. Efficiency is a worthy goal, but I am much more concerned with effectiveness.
I completely agree. While it is obvious that there are legitimate ways that city government can be made more efficient and cost-effective, it's not clear how that will change the fundamental dynamics of how the city (not city government) functions and prospers. I think that's one of the reasons that charter reform got so little support at the polls; it was never clear how reform would make our lives any better. Democracy by its nature is not efficient. Having 94 municipalities in one county is certainly not efficient, as is having 171 fire departments in a metropolitan region, yet we tolerate and regularly defend this structure. The real question is not the efficiency of local government, but its effectiveness. The real complaint about our public school system is not what it costs, but how little it delivers in results for our children. That's the reason that I believe that this obsession with the earnings tax is a dead end. Changing the earnings tax will not make our lives any better; it will result in higher taxes for some and lower taxes for others, but it won't make our city or our region work any better.
You had alot of time to do some research and back up your position on the tax. You decided not to do any. I am disappointed, Steve.
My position is we need to evaluate our government, including revenue sources. We may end up with a earnings tax or not. If kept it might remain unchanged or be modified.
I've actually contemplated running for Alderman on the basic platform that I wanted to do away with the job I was running for. “Vote for me and I'll eliminate my position!” Not sure if people would want that though.
From the great state of New Jersey: “N.J. loses $70B in wealth during five years as residents depart” (http://www.nj.com/business/index.ssf/2010/02/nj…) People DO vote with their feet. Substitute “St. Louis” for “New Jersey” in this article, and you can get a better idea of how high taxes are a major disincentive to a prosperous future here . . .