JEFFERSON CITY 鈥 A panel of state lawmakers wants to exempt low-income workers from 狐狸视频鈥 1% earnings tax and phase it out altogether if the city meets certain revenue benchmarks.
Those are two of the recommendations released Wednesday by the Republican-led House Special Committee on the Earnings Tax, which held a series of public hearings during the legislative off-season last year.
The committee, led by Rep. , R-south 狐狸视频 County, proposed exempting workers earning less than 150% of the federal poverty level 鈥 or less than $21,870 for an individual 鈥 from the tax.
And, a phase-out would be 鈥渢ied to pre-determined revenue increases, with a 10% reduction triggered until complete elimination,鈥 according to a news release.
People are also reading…
The committee also recommended tax exemptions for new residents and to create 鈥淓arnings Tax Opportunity Zones鈥 to boost business and population in 狐狸视频 and Kansas City, the two jurisdictions where a local earnings tax is levied.
The committee issued its recommendations as lawmakers returned to the capital city for their five-month legislative session.
The earnings tax has faced pushback for years in the Republican-controlled Legislature, but city voters have largely affirmed it.
In a 2011 referendum, 88% of voters voted to keep the tax in place. In 2016, that number was 72%. In 2021, the tax was supported by 79% of voters.
The tax generated more than $200 million for city coffers in fiscal year 2022.
Paul Payne, budget director for the city of 狐狸视频, said in October that 79% of the earnings tax comes from individuals and 21% comes from corporations.
He said probably about two-thirds of the revenue coming from individuals is coming from nonresidents.
Nick Dunne, spokesman for Mayor Tishaura O. Jones, said the earnings tax funds critical government services and that proposals to scale back or eliminate the tax without plans to replace the revenue 鈥渁re proposals to gut fire and police services, street maintenance and upgrades, parks, the courts, the Circuit Attorney鈥檚 office, and much more.鈥
Dunne said there was no evidence the earnings tax a barrier to economic growth and that Jones鈥 administration 鈥渋s making targeted investments to spur economic and population growth that will restore disinvested neighborhoods and boost tax revenue under the current structure.
鈥淲e are only interested in plans that will lead to growth and prosperity, not austerity,鈥 Dunne said.
Murphy鈥檚 committee also studied residential real property assessments.
One of the recommendations is to 鈥渃lose loopholes鈥 in state law that allow local governments to evade the Hancock Amendment, which limits tax increases.
鈥淭hese proposals aim to promote fairness, relieve burdens on low-income workers, and encourage economic growth,鈥 Murphy said in a statement.
Rep. Steve Butz, D-狐狸视频, said Thursday none of the committee鈥檚 three Democrats signed onto the committee report. He said he was preparing a formal response.
Butz said Democrats philosophically supported exempting low-income workers from the tax, but that he hadn鈥檛 heard back from the city on the fiscal effect of such a change.
On phasing out the tax as revenue benchmarks are met, Butz said, the recommendations miss the mark 鈥渋n the sense that there is no other viable taxing option to replace that kind of revenue in 狐狸视频 and Kansas City.鈥
During an address to lawmakers Wednesday, House Speaker Dean Plocher, R-Des Peres, blasted 鈥渆gregious鈥 property tax increases.
鈥淲hy are we leaving unchecked egregious property tax increases that are starting to erode the American Dream?鈥 Plocher asked.
After the speech, Plocher said the earnings tax wasn鈥檛 the right way to help the city of 狐狸视频 thrive.
Senate President Caleb Rowden, R-Columbia, said Thursday the House had done 鈥済ood work鈥 on the issue.
鈥淚t鈥檚 not good public policy,鈥 Rowden said of the earnings tax.
Senate Minority Leader John Rizzo, D-Independence, said voters have overwhelmingly supported the earnings tax in elections.
鈥淚f people don鈥檛 like the e-tax, they can vote against it,鈥 Rizzo said.
The House and Senate must sign off on any of the recommendations before they head to Gov. Mike Parson鈥檚 desk for consideration. The legislative session ends May 17.