Kansas City voters on Tuesday overwhelmingly approved renewing the city’s 1% earnings tax.
The tax is Kansas City’s single largest revenue source: It brings in about $373 million annually, which makes up about 45% of the city’s general fund. A failed vote would have forced Kansas City to look elsewhere to make up that revenue or institute significant budget cuts.
With all precincts reporting, more than 75% of voters in the April 7 election approved the measure.
This is the second earnings tax renewal to have occurred and passed during Mayor Quinton Lucas’ time in office.
“We are dealing with any number of issues in the world, in our state and in our community,” Lucas said at a watch party for the tax renewal. “Time and time again, the voters of Kansas City say ‘Yes, we want to make sure that our workers are paid fairly and paid well. Yes, we want to make sure that we are taking care of basic services in our community.’”
People who live or work in Kansas City pay the earnings tax, which is also applied to the net profits of businesses based in the city.
Nearly half the earnings tax revenue comes from people living outside city limits, which creates a regional tax where people who live in Kansas City’s suburbs but use the city’s amenities and roads financially support those services.
The earnings tax was first implemented in 1963 and increased to 1% in 1970. Voters didn’t have to weigh in on the tax again until 2010, when Missouri passed a law requiring Kansas City to vote on the earnings tax every five years.
The tax has won renewal every time it’s appeared on the ballot. An overwhelming majority of voters supported it in 2011, 2016 and 2021.
Many of Kansas City’s local groups, elected leaders and unions endorsed a “yes” vote on renewing the tax. That includes nearly every member of the city council, the Missouri AFL-CIO and the Greater Kansas City Chamber of Commerce.
There was an organized campaign against the earnings tax in 2016, but no opposition this time around. Council member Nathan Willett, who represents parts of Kansas City’s Northland and is running as a Republican for U.S. Congress, told The Beacon he would vote “no” on the earnings tax renewal.
Willett was also the only vote against placing the renewal question on the April ballot. He argued that the measure should be considered in August or November, when elections typically have higher voter turnout. At that city council meeting, Lucas said state statute dictates the city must place earnings tax votes on the April ballot.
Had Kansas City voters rejected the earnings tax renewal, the tax wouldn’t go away immediately. Instead, it would phase out by 10% each year for 10 years — and the city would be prohibited from reinstating the earnings tax anytime in the future.
The city would need to raise its sales and property taxes to fill the budget deficit left by the tax, if the Missouri Legislature would give the city that authority. Otherwise, it would require severe budget cuts.
Lucas urged the Missouri legislature to lift the requirement that Kansas City renew the earnings tax every five years. He said voters have proven in each election cycle that they want it to continue.
“We will push next term the Missouri legislature to make sure that we don't have to come back to this all the time, that we don't have to spend the money, the time, the resources, do all of the work to keep coming to this for the people of Kansas City,” Lucas said. “So hopefully we can focus on how we can grow our city. We can focus on how we build a strong city for the future.”
