Kansas City Officials Make Their Pitch To Save Earnings Tax
City officials kicked off a campaign to save Kansas City’s 1 percent earning tax Monday at Union Station.
It’s sometimes called a “fly over” tax by opponents because about half of the people who pay it commute from the suburbs to work in the city.
“I don’t care whether you call it an earnings tax or a fly-over tax or a ground tax or a water tax or whatever the heck you call it, $230 million would have to be replaced,” Kansas City Mayor Sly James said.
That’s what the tax brought in last year – about 40 percent of the city’s general fund. Kansas City voters have historically supported the earnings tax, but there’s added pressure this year because many conservative state lawmakers want to abolish it.
“Me, we, the council, the manager, all of our department heads, all of our city employees work very hard to expend city dollars and earnings tax money prudently with an eye toward continuing to build the city for the next 40 or 50 years,” James said.
If voters reject the earnings tax, it would be phased out over 10 years, necessitating drastic cuts to first responders.
But Patrick Ishmael with the Libertarian-leaning Show-Me Institute doesn’t think the city officials should be cutting police officers and firefighters if their campaign is unsuccessful.
“Whether we need to increase taxes any place else I think remains an open question because I think in the short term what you’d see is the city having to be more efficient,” Ishmael says.
Instead, he says the city should stop offering tax incentives to developers.
“What ends up happening is the city ends up giving away north of $100 million a year and then says, ‘Well, we need the earnings tax,’ and then takes the money out of the East Side,” Ishmael says.
Instead, Ishmael wants low-wage workers in those communities to keep more of their paychecks so they can begin building wealth.
Margaret May with the Ivanhoe Neighborhood Council disagrees. May thinks her community, which lies east of Troost, benefits the most from the tax.
“People in the neighborhood, especially the center part of the city, probably utilize the services that come through the earnings tax more than anyone,” May says. “There’s a greater need for the trash removal, for the police services and all.”
May is worried property taxes will go up if the earnings tax fails. That, she says, would hurt the many retirees in Ivanhoe who don’t pay the earnings tax but do own their homes.
Elle Moxley is a reporter for KCUR. You can reach her on Twitter @ellemoxley.