Kansas City Defends Earnings Tax at Jeff City Hearing

Kansas City Mayor Sly James urged state lawmakers to “leave us alone” when it comes to the city’s earnings tax.

James led a large delegation of Kansas City civic, business and labor leaders to a Jefferson City hearing on a bill proposing to eliminate the earnings tax of Kansas City and St. Louis.

Mayor James says local voters overwhelming approved renewing the tax 5 years ago and that should mean something to state legislators.

“You certainly ask the federal government to leave you alone. And yet you turn right around and act like the federal government to the cities,” James said.

Columbia State Senator Kurt Schaefer called his bill to eliminate the earnings taxes in both cities, a means to start a conversation.

“As Jackie Gleason says in ‘Smokey and the Bandit’, “this is an attention getter,” Schaefer said.

He said the state is involved because state lawmakers authorized the earnings tax for Kansas City and St. Louis in 1948.

He says the state and the two cities should now start working on an earnings tax alternative.

Schaefer predicted that the cities and state would lose a lawsuit challenging the earning tax.

He says that’s because the US Supreme Court struck down a similar earnings tax in Baltimore.

Kansas City’s legal department disagrees with that.

They believe Kansas City’s earnings tax, which permits tax credits for non-Kansas City residents who pay the tax, keeps the local earnings tax legal.

James predicted that sales tax would have to double and property taxes triple if the earnings tax in Kansas City is eliminated.

He also said there would be major layoffs in the police and fire departments.

Kansas City attorney Woody Cozad disagreed with the mayor’s prediction of big lay-offs in the public safety departments.

“In Kansas City we love our cops and we love our firefighters. And we love them so much that if this tax goes away, that is not what the people are going to permit being cut,” he said.

The City says the earnings tax generates about $230 million a year. That’s ios about 40% of the City’s General fund.

The committee took no vote on Schaefer’s bill. Chairman Will Kraus says committee members may work on the plan for a couple of weeks and then decide what to do