Ignore reckless critics and renew Kansas City’s earnings tax for vital public services

Kansas Citians will make a critical financial decision next Tuesday: Do they want to renew the 1 percent earnings tax that would raise $1.2 billion over a five-year period?

The obvious answer is “yes,” given the important support the tax provides for public safety and other city services.

The earnings tax generates about $240 million annually, far higher than any sales or property tax that voters have either approved or rejected in the last three decades.

Take that amount times five years — the lifetime of the proposed extension from January 2017 through December 2021 — and that’s $1.2 billion in revenue for City Hall.

In short, the stakes are high.

Proponents in the business community have raised $1 million for a positive campaign.

Meanwhile, St. Louis multimillionaire Rex Sinquefield has contributed about $2 million in his solely funded effort to help his minions kill the tax with a slew of misleading ads.

With the election around the corner, here’s a review of three issues worth voters’ attention.

Firefighters finally kick in

Last Thursday, the City Council capitulated to the politically powerful fire union.

Elected officials abruptly abandoned a plan worked out by City Manager Troy Schulte and gave firefighters excessive pay increases that could cost taxpayers up to an extra $12.7 million over four years.

By Friday, the fire union finally had contributed $50,000 to the campaign to pass the earnings tax — which is mostly used to finance the fire and police departments.

The tit-for-tat experience of the council cave-in and the union’s subsequent campaign donation drew a bit of public ire on social media.

Treating the firefighters better than other employees, including police, is unfair.

However, this misstep is not a good enough reason to oppose a tax that the city staff and council for the most part properly use.

Higher property tax threat

One of the joys of this campaign has been watching Sinquefield and his buddies at the Show-Me Institute — the think tank he co-founded — try to offer rational economic reasons to get rid of the earnings tax.

Spoiler alert: They haven’t done it yet because it’s actually difficult to replace $240 million without gutting public safety or hiking other taxes.

Which is exactly what the institute recently suggested: “Moving from income taxes and toward property taxes would not only ensure that municipal tax collections are more stable but also that the city’s taxes would be less economically harmful to the city and the region as a whole.”

Hmm. Who pays property taxes?

▪ Retired people who don’t have earned income and don’t pay the earnings tax. Here’s a potential tax boost for them.

▪ Only people who own property in Kansas City, which would increase their tax burden.

▪ And businesses. So much for making Kansas City a more welcoming place for companies to put down roots.

Pretending that the earnings tax will go away and not be replaced by something that would likely try to create $240 million a year is simplistic and misleading.

Then again, that’s been Sinquefield’s game for years in his bid to kill the tax.

Voters’ rights

Some opponents are arguing that representative democracy has broken down in the battle over the earnings tax.

People affected by the tax, goes this claim, don’t have a way of registering their views on it.

It’s a lovable line — but totally irrelevant.

People in the Kansas City area pay lots of taxes they don’t have a chance to weigh in on, either at the ballot box or through an elected official.

Johnson Countians who work in Kansas City will pay city and county sales taxes for a workday lunch here — taxes they had no power to approve or reject.

Flip the script, and Kansas Citians who wander over the state line to buy goods or eat at restaurants don’t have a say over the local or state sales taxes charged in Johnson County.

And business owners all around the region shell out property taxes for buildings they own in cities in which they don’t live or vote.

This kind of arrangement is status quo around the nation because it often makes sense. In this region, the Johnson Countians who work in Kansas City are using services and depending on public safety paid for through the city’s earnings and sales taxes. Kansas Citians employed in Johnson County get services provided by local taxes there.

Singling out the earnings tax for the criticism that it’s not “democracy in action” is grasping at straws. Yet detractors have used this approach for months.

Supporters next Tuesday should reject this kind of reckless and shortsighted thinking and renew the 1 percent tax for five more years.

This story was originally published March 28, 2016 at 3:25 PM with the headline "Ignore reckless critics and renew Kansas City’s earnings tax for vital public services."