The Star’s recommendation on vote for Kansas City earnings tax renewal | Opinion

On April 7, voters will be asked whether to renew the 1% earnings tax on the wages of people who live or work in Kansas City. There is only one answer to Question 1 on the ballot.

Yes, the tax must be reauthorized. It pays for nearly half of the city’s general fund. To jettison it would mean drastic, immediate cuts to law enforcement, firefighting, street maintenance and much more. Voters are likely to approve it, as they have by huge majorities since it was first required to go on the ballot every five years in 2010. It’s an indispensable part of how Kansas City works.

However, that should change. The earnings tax is not the best way to fund such a large proportion of our city services. It was first instated in the 1960s, and municipal government has grown to rely on it at an institutional level. St. Louis depends on a similar system, though it provides a slightly smaller slice of the budget pie. And city wage taxes have undeniable foundational problems.

“Local income taxes do tend to be more economically harmful, more volatile from a revenue standpoint, and more administratively complex than other sources of local revenue, like local property taxes and sales taxes.” Those are the words of Katherine Loughead, who spoke to The Star Editorial Board Wednesday. She is director of state tax projects for the Tax Foundation, a nonpartisan but right-leaning 501(c)(3) nonprofit that has been analyzing tax policy for almost 90 years.

A big part of why the earnings tax is more harmful than necessary is that it’s flat. In strict terms, it’s a proportional tax — everyone who is employed or lives in Kansas City pays the same 1%. In effect, though, it acts as a regressive tax, meaning that people at lower socioeconomic levels bear more burden. Those who earn less money and have fewer economic resources pay a far larger portion of their net worth to the earnings tax. Many wealthier Kansas Citians make large amounts of money from investments such as stocks, which are not subject to the earnings tax. That includes our neighbors who don’t have to work to maintain their lifestyle.

Capital gains eliminated in Jefferson City

Regardless of your household income, you drive the same roads, call the same 911 operators and get your trash picked up by the same collection crews. It’s the essence of unfair that the richest among us pay the smallest percentage for those basic services.

That is absolutely not an argument to vote no in this election. It took Kansas City decades to get to the point of overreliance on its earnings tax, and untangling it into a more just and equitable system will take years more. It’s unlikely city leaders could come up with a better solution by the time the 2031 reauthorization vote rolls around. That doesn’t mean they shouldn’t start to lay a new foundation now, though.

Few other American cities impose a wage tax, though they all need money. There are better ways to raise revenue for municipal operations, which should be put to a vote:

• Add a standard deduction to the city earnings tax, indexed to the IRS rate for federal tax filers. For 2025, that’s $15,750 for single or married filing separately, and $31,500 for a married couple.
• Restructure the flat 1% tax to begin at perhaps half a percent after the standard deduction, and raise it progressively on higher earners, with a cap of 1%.
• Most important: If we tax wages, we should also tax investment income. Irresponsible politicians in Jefferson City just made Missouri the first state to eliminate its capital gains tax. Consequently, they are already facing a budget shortfall of roughly half a billion dollars this year. Again, the wealthiest make the largest share of their income from stocks, dividends and private equity, with much of that money coming from outside Missouri.

It is patently wrong that the 19-year-old changing oil at a garage to pay for community college is charged 1% on earnings, while the 40-year-old renting a downtown high rise apartment with proceeds from trust fund investments pays the city nothing on that income.

We are wholly cognizant of the pain of property and sales taxes, along with the fees and licenses we already pay. And City Hall does have a spending problem, earnings tax revenues being a major enabler. But the unneeded expenses aren’t filling potholes and patrolling neighborhoods. They’re the obscene incentives doled out to deep-pocketed developers who have too easy a time getting the public’s money to construct their for-profit hotels and office buildings.

We hope to see future City Council candidates campaigning on a pledge to reform the system. We also hope to see council members who vow to keep the basics of what makes a city hum fully funded — and ratchet back the incentive handouts.

Kansas City’s earnings tax is far from perfect. But rejecting it without a solid plan to replace its revenue would be catastrophic for a city that is clearly on an upward trajectory. We strongly recommend a yes vote for Question 1 on Election Day.

This story was originally published March 31, 2026 at 5:08 AM.