KCUR News
9:39 am
Fri April 1, 2011

Kansas City Voters Decide Future of Earnings Tax

KANSAS CITY, Mo. – Newly elected Kansas City Mayor Sly James hasn't even taken office yet, but in his acceptance speech on election night he acknowledged he's got a big job ahead of him.

"I need you to tell your friends, I need you to educate your neighbors. We need to make sure we renew that earnings tax," said James.

Kansas City, Missouri voters will decide the future of the earning tax on Tuesday. Both sides of the debate say the vote is critical to future growth of the city.

Everyone that lives or works in Kansas City, Missouri pays a one percent tax on what they earn. The earnings tax was first approved here in 1963 and raised to one percent in 1970.

Now, the city collects almost 200 million dollars each year from the tax. Save Kansas City is the group supporting the e-tax.

Spokesman Dan Cofran maintains that money is needed to pay for some of the basics.

"The earnings tax is critical because it provides right at 38 percent of our general fund basic services budget, so it all goes to police, fire, ambulance, trash pick up and that sort of thing," said Cofran.

He said besides being critical to paying for city services the earnings tax is fair. Tens of thousands of people work in Kansas City that don't live here.

"One half of the earnings tax is paid by people who do not live in Kansas City but have their jobs in Kansas City, so it's only fair that they should help pay out and I believe they do not object to it. Without the earnings tax, we'd have to make up that whole amount ourselves," said Cofran, "It would be like giving away 100 million dollars."

If the earnings tax doesn't pass it will be phased out over ten years, but Cofran said the effects would be immediate--fewer cops and firefighters. Cofran claims that would mean fewer businesses and people looking to live here.

Woody Cozad is the spokesperson for Freedom PAC, the group opposing the earning tax. He said it's the earnings tax that's turning people and businesses away from Kansas City.
Because it kills jobs and is a drag on the economy of Kansas city, Missouri, makes it less competitive in an increasingly competitive environment, and keeps the population from growing as rapidly as it otherwise would.

"The idea that if you don't have an earnings tax you can't survive is nonsense. Most of the big cities in America survive nicely without it," said Cozad.

He points to a report that looks at 150 largest cities in the country. 125 of those cities don't have an earnings tax.

"All of them have no earnings tax, and guess what? They have firefighters. They have police. They fix their streets. They fix their sewers. They run their airports. They do everything we do in Kansas City, and they perform better economically on average than cities that do have an earnings tax," said Cofran.

Cozad says the earnings tax says the earnings tax is bad for business, especially small businesses. The Chamber of Commerce disputes that claim. The chamber including it's small business committee is backing the earnings tax. Kristi Wyatt is the vice President for Government affairs and policy development. She says the Chambers found the earnings tax is not a big deal when businesses are looking to move.

"Incentives, tax credits, and things like that are very important considerations that some businesses make in deciding where to locate. But from what we hear the issue of the e-tax would be very far down the list," said Wyatt.

In the end, some of those most opposed to the tax don't get a vote. They live in Overland Park, Lee's summit, or elsewhere outside city limits but work in Kansas City. If Kansas City voters decide to keep the tax, by state law, they'll be back at the polls in deciding the issue again in five years.