Kansas City praised, St. Louis criticized during House hearing on earnings tax

(The Center Square) – Republicans on a special House interim committee examining the 1% earnings tax in St. Louis and Kansas City are scheduling hearings in both cities after praising one and criticizing the other.

“I’m disappointed that [St. Louis] did not send someone from the executive or the legislative side that would handle the spending because I think that’s an important part of this discussion,” Rep. Tony Lovasco, R-O’Fallon, told St. Louis Collector of Revenue Gregory F.X. Daly during Tuesday’s first hearing in Jefferson City.

Daly testified first and emphasized how voters approved the earnings tax by 88% in 2011, 72% in 2016 and 79% in 2021.

“The earnings tax is designed to be a tax that provides equity and fairness, which means it’s not imposed most heavily on those least able to pay,” Daly said. “It’s designed to be paid by users of city services, which include residents and non-residents, and it is designed to adapt with the economy.”

Committee Chairman Jim Murphy, R-St. Louis, apparently wanted more than history and the purpose of the earnings tax from Daly.

“I don’t think this is a good way to start this hearing by defending what we’re doing now and not opening our eyes to a better way,” Murphy said. “We’re here to look for a better way, not to destroy this city. The city is too important to us.”

Tammy Queen, the director of Kansas City’s finance department, was praised for testimony on the city’s approach to the earnings tax, especially for the city’s decision to refund earnings taxes to remote workers during the pandemic.

“Every five years when we have to come for a vote, we take that very seriously and we realize that we’re just one vote away from phasing out the earnings tax,” Queen said.

Murphy highlighted the distinction between the testimony of the city representatives.

“It’s almost like [St. Louis] was saying, ‘We’re entitled. We’re not here to serve you. We’re entitled to this,’” Murphy said. “Kansas City took the other approach that they’re there to serve and do the right thing and I applaud you for that.”

Mark Milton, a St. Louis attorney representing plaintiffs in a lawsuit against the city contesting the earnings tax for remote workers during the pandemic, testified Daly was put in a poor position when his office stated there wouldn’t be any refunds for working outside of the city during shutdowns.

“I have a lot of respect for the collector and I feel he’s been put on an island in this whole thing,” Milton said. “I don’t know who was involved in the decision not to issue the refunds, but there was no change in law. I think the collector knew the law … They tried to sort of makeup legal justifications after the fact.”

Murphy stated at the end of the hearing he intends to conclude the committee’s work in late October, leaving the hearings in Kansas City and St. Louis to take place during the next few weeks.

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