A Republican state senator from Columbia wants to do away with a local tax that makes up more than one-third of Kansas City’s budget.
Sen. Kurt Schaefer, chairman of the Senate appropriations committee and a candidate for attorney general, filed legislation Tuesday that would repeal the earnings tax in Kansas City and St. Louis. He originally floated the idea this summer in response to both cities passing local minimum wage increases over the opposition of the legislature.
“The most responsible way to increase wages in our state is by simplifying our tax code and allowing taxpayers to deposit more money in every paycheck,” Schaefer said in a statement.
Kansas City’s minimum wage ordinance was ultimately repealed by the City Council, and the legislature passed a bill prohibiting any future local wage hikes.
The earnings tax has been in place in Kansas City since 1963.
In 2010, a successful ballot measure spearheaded by GOP megadonor Rex Sinquefield mandated that the earnings tax be reapproved by local voters every five years. The next year, Kansas City residents voted by a 3-to-1 ratio to keep the tax in place. It will go on the ballot again in April.
Schaefer’s attorney general campaign has taken $750,000 from Sinquefield.
Mayor Sly James of Kansas City said in a statement late Tuesday that the proposed legislation “is faulty in so many respects that it’s hard to know where to start.”
James pointed out the earnings tax is the single major source for Kansas City’s general fund.
“Three-fourths of the fund supports police and fire services and those services available to the entire metro area through mutual aid agreements,” he said.
In the past, the mayor has said keeping the earnings tax is absolutely essential to avoiding drastic cuts in basic services.
“The earnings tax functions well, as it has for 50 years, and we will be vigorously fighting this wrong-minded legislation in January,” James said in his statement.
The tax raises $228 million a year in revenue and is paid by anyone who lives or works in Kansas City. Approximately 50 percent of the earnings tax is paid by people who do not live in the city but use city services in the course of their workday.
Schaefer said he believes the earnings tax is unconstitutional and hurts “employment investment and growth in our state’s two largest cities.”