What is the tax question on Kansas City ballots? What to know about earnings tax
It’s Election Day, and Kansas City voters are weighing in on a question that may seem mundane but could have major consequences for the city’s most basic services.
Voters will decide whether to keep the city’s earnings tax going for another five years, an issue accounting for hundreds of millions of dollars of the city budget each year that pays for the city’s day-to-day operations.
They include: The police. The fire department. Ambulances and medical services. Trash collection. Removal of dangerous buildings. Service on the city’s debt. Affordable housing programs. Street repair. Snow removal.
The ballot question reads as follows:
“Shall the earnings tax of 1%, imposed by the City of Kansas City, be continued for a period of five (5) years commencing January 1 immediately following the date of this election?”
Here’s what to know before you vote.
What is Kansas City’s earnings tax?
Earnings tax revenue reflects about 45% of the city’s general fund. The tax brings in more dollars than other funding sources in Kansas City’s budget, including property taxes, sales taxes, fees, fines, state money or federal money, budget documents show.
The general fund is the part of the city budget that is used, like a discretionary checking account, to support the day-to-day operation of city services. Think: filling potholes, collecting garbage, answering 911 calls, responding to code violations, maintaining parks, that kind of thing.
“The earning tax is one of the most critical and stable revenue sources for the city, supporting the core services that residents, business and visitors rely on every day,” Councilmember Andrea Bough, chair of the city’s finance committee, told The Star. “Without the earnings tax, the city would face significant budget shortfalls.”
Who pays it?
The earnings tax is collected from the salaries and wages of those who live in or work in Kansas City, alongside the net profits of businesses.
(It does not include sources like pensions, Social Security payments and other retirement income.)
Half of the earnings tax is paid by people who live outside of Kansas City, according to city documents. Somebody who lives in Shawnee but commutes to a job in the Plaza, for example, pays the 1% tax on their wage.
How long has it been around?
The earnings tax in Kansas City was first implemented in 1963 and has been at 1% since the 1970s.
But in a statewide ballot initiative in 2010, Missouri voters passed a law that requires voters in cities with an earnings tax to vote on it every five years. That implicates only Kansas City and St. Louis.
Kansas City voters have since supported the earnings tax by wide margins in 2011, 2016 and 2021.
Several other cities in the United States collect earnings taxes, including Philadelphia, Pittsburgh and Cleveland.
What happens if it fails?
If voters knock down the decades-old tax, Kansas City officials say services could be thrown into disarray as it would be extremely difficult to replace hundreds of millions of dollars in lost revenue.
“There’s not really a great source to simply replace $351 million worth of revenue,” finance official William Choi told the City Council.
The city would not be allowed to revive the earnings tax if voters choose to not renew it. If the renewal fails, the earnings tax would be phased out over 10 years, or by 0.1% each year for 10 years until it’s gone.
The city could look into increasing other taxes to make up for the lost revenue: perhaps doubling the city’s sales tax portion to 6.5%, or more than quadrupling the city’s property tax levy rates, Choi said. (Other government agencies levy sales and property taxes on top of the city’s rates.)
But officials can’t just do that on their own — or quickly — to make up the lost money: Increasing sales or property taxes would each require changes to state law and separate approval by voters.
“It would be really devastating for the tax base in the city and they would have to radically alter — whether it’s property taxes or they would have to do something or sales tax — to make up that gap,” said Matt Harris, a political scientist at Park University.
Who supports the earnings tax?
A broad coalition of Kansas City leaders across the political spectrum support the earnings tax.
You may have found your mailboxes and television screens teeming with ads — endorsed by some 40 organizations that include the Kansas City Chamber of Commerce, the Hispanic Chamber of Greater Kansas City, the Heartland Black Chamber, the Greater Kansas City AFL-CIO, the Heavy Construction Association of Greater Kansas City, the Kansas City Fraternal Order of Police and the Civic Council of Greater Kansas City — urging voters to approve it.
A group of elected officials and civic leaders held a press conference recently to encourage residents to support it, including Mayor Quinton Lucas, Jackson County Prosecutor Melesa Johnson and the leaders of the local police and fire unions.
“There are a lot of things that happen in the world — I’ll control what I can control,” Lucas said. “I would ask people in Kansas City to do the same and what we can control is making sure we’re taking care of our employees, making sure we’re taking care of basic services and our city by voting yes.”
Who’s against the earnings tax?
There is no formal campaign against the earnings tax, and the tax has historically passed overwhelmingly.
But the main hurdle for supporters of the measure, called Question 1, will likely center on broad voter resistance to taxation amid a slew of hot-button issues in the metro — such as Missouri’s push to eliminate income taxes, frustration over property assessments in Jackson County and outrage over public funding for professional sports stadiums.
Over the last several years, general anti-tax sentiment has seeped into a constellation of political issues across the Kansas City metro.
Much of that resistance in recent years has come from Kansas City’s Northland, said Matt Harris, a political scientist at Park University. The bustling suburban area, which includes Clay and Platte counties, typically leans more conservative than the city’s urban core.
“People are upset about property taxes and I don’t think people necessarily differentiate,” Harris said. “When there’s an anti-tax sentiment, I think that kind of can cross boundaries and just go towards sort of taxes in general.”
Kansas City council member Nathan Willett, who represents a Northland district, was the sole council member who voted against placing the earnings tax measure on the ballot.
