KC no longer included in state bill to eliminate earnings tax

Lawmaker says show of support from KC leaders had an impact

KANSAS CITY, Mo. —A Missouri bill aimed at abolishing the earnings taxes in Kansas City and St. Louis is changing.

As KMBC 9 News first reported Wednesday night, a new version of the bill will no longer include Kansas City’s earnings tax.

The earnings tax, also known as the e-tax, taxes 1 percent of the earnings made by anyone who works in Kansas City, regardless of where they live. Kansas City said the tax generates about 40 percent of the money in the city’s general fund.

A Senate committee pulled Kansas City out of the bill, something Kansas City Mayor Sly James said surprised him.

The bill’s sponsor, State Sen. Kurt Schaefer was warning the earnings tax could be struck down in court because a similar one was in Maryland. Kansas City’s earnings tax has a tax credit that prevents double taxation for nonresidents, keeping it legal.

James said he thinks that why the bill may have changed.

“They never exactly said why they pulled us out,” he said.

James said he was back in Jefferson City on Tuesday to work against the bill. Two weeks ago, he and 30 Kansas City representatives testified against it.

Committee chairman Sen. Will Kraus said the show of support from Kansas City had an effect.

“When you have an activity community willing to speak out, it makes lawmakers pay attention,” he said.

Lately, Kansas City has been talking a lot about the e-tax, which still faces its five-year renewal vote in April. The tax generates a third of the city’s budget in St. Louis and lawmakers are still trying to kill it there.

“I think it was not in the best interest of the two largest cities in this state that produce a heck of a lot of the gross revenue of the state yearly,” said James.

St. Louis Mayor Francis Slay said that he doesn’t think the bill that now just focuses on his city’s e-tax will survive, saying it’s just for the headlines.

James said the e-tax debate is part of a bigger dispute with the Missouri Legislature and issues affecting its two biggest cities. Those issues also include gun control and the municipal court’s authority to assess fines.

James said the same thing he told lawmakers about the e-tax applies to those other issues.

“What I said to them when I was down there was, ‘I’m not asking for a penny. All I’m asking you is to leave us alone,’ I am still on that note,” he said.