Kansas City now cut out of Kurt Schaefer’s earnings tax repeal bill

Bad news for earnings tax advocates: A bill that sought to eliminate the 1 percent tax on employee earnings and business profits advanced out of the Missouri Senate Ways & Means Committee on Thursday.

The good news for earnings tax advocates: Kansas City is no longer part of the bill.

Missouri state Sen. Kurt Schaefer, R-Columbia, had introduced a measure before the Missouri General Assembly started the 2016 session, which would cut the earnings tax entirely for Kansas City and St. Louis in 2017. Schaefer has recently championed his idea as a measure to stave off a constitutional challenge to the earnings tax, even though Kansas City leaders remember that last year he threatened the legislation as payback for the city seeking to increase minimum wage. Kansas City’s legal department disagrees with Schaefer’s analysis that the earnings tax is unconstitutional.

Schafer’s legislation was seen as a nightmare scenario for Kansas City’s budget, which depends heavily on the $230 million it brings in each year for the city’s general fund. Without it, city leaders warned, residents should expect cuts in services, particularly public safety.

But Schaefer’s bill wasn’t received too warmly among colleagues in Jefferson City, and was met by heavy lobbying against it by Kansas City civic and political leaders. Kansas City Mayor Sly James spent time this week personally meeting with lawmakers in Jefferson City, hoping to dissuade them from entertaining Schaefer’s measure. 

Word surfaced Thursday that Schaefer’s bill had advanced out of committee, but had been amended to phase out St. Louis’ earnings tax over 10 years and not touch Kansas City’s earnings tax at all.

(Schaefer, meanwhile, is dealing with a bigger political issue after recently resigned University of Missouri System President Tim Wolfe on Wednesday accused Schaefer, a candidate for Missouri Attorney General, of meddling in personnel matters at MU. Wolfe claimed in his letter that Schaefer had asked him to block MU professor Josh Hawley from running for attorney general or remove his faculty appointment at the university, a charge that Schaefer denies.)

That removes the most immediate threat to Kansas City’s earnings tax. City leaders are still mindful of an April election in which voters can decide whether to keep the earnings tax or phase it out over the next 10 years. Civic leaders gathered at Union Station on Monday to kick off an official campaign to convince voters to approve it. Last time Kansas City voters were asked about it in 2011, 78 percent of voters decided to keep the earnings tax.

It seems likely to pass again this year, although city officials aren’t taking it for granted. 

For more about Schaefer and his crusade against the earnings tax, read our profile on him out this week.

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