Shhhh! Talk of Earnings Tax Will Frighten Children


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by Jack Cashill
Published in ingramsonline.com - February 2010

A Kansas City Star article that just might have been ghosted by the brothers Grimm describes a potential City Council vote on the city’s 1 percent earnings tax with these words: “alarming,” “alarmed,” “nightmare,” “demise,” “threat,” and “frightening.”

These, by the way, are just the words that newspaper employs in its somewhat breathless coverage. The civic leaders interviewed for the article further inflate their constituents’ goose bumps with shivery rhetoric of their own.

John Sharp, chairman of the council’s Legislative Committee, fears the loss of the tax could turn the city into “an economic basket case.” Meanwhile Deb Hermann, the Finance and Audit Committee chair, frets, “I think it’s frightening.”

Good fairy tales always have a foil, and this one is no exception. Boogie man emeritus honors here go to St. Louis businessman Rex Sinquefield, who is presumed creepy on three separate counts. One is that Sinquefield comes from the distant and ominous land of St. Louis. A second is that he is “wealthy” and invariably described as such. The third, and scariest, is that Sinquefield—horrors!—is an out-of-the-closet libertarian who founded an openly free market think tank, the Show-Me Institute.

As to the wealth, one Star headline reads, “Millionaire’s campaign aims to repeal earnings tax in KC and St. Louis.” Word to the Star: “millionaire” does not have quite the shock and awe factor it did three centuries ago.

The word was coined in France circa 1720 to describe the beneficiaries of the Mississippi Bubble. Today, half the people over 50 in Johnson County are millionaires, which, in itself, is symptomatic of Kansas City’s problems.

Yes, Sinquefield, a retired investment counselor, is wealthier than the average bear. Last month, he invested $500,000 from his own honey pot in a new political committee, Let Voters Decide. The committee will try to sweet talk 95,000 registered voters into signing a petition to put the earnings tax on a statewide ballot.

As to Sinquefield’s politics, his libertarian/conservative leanings have earned him a “controversial” label from the Star and a public rummaging of Show-Me’s IRS filings, the salaries of its principals, and Sinquefield’s political contributions.

Unstated in the Star articles, but insinuated, is that Sinquefield may be trying to buy the city and its mayor for some purpose other than Show-Me’s stated mission to “advance public policies that enhance economic growth and opportunity,” a mission coyly rendered suspect by its citation only in quotes.

One could write the inquisition off to good journalism if the Star did the same to its ideological kin—the late George Tiller and his various PACs come to mind—but at 18th and Grand, potential tax cuts are more controversial than illegal late-term abortions. Yes, literally.

There is, however, something stranger than usual about this brouhaha, namely that a successful statewide campaign by Sinquefield and allies would not repeal the earnings tax. It would merely return taxing power to the citizens of Kansas City and St. Louis.

If the ballot measure passed statewide, local taxpayers would have the opportunity to repeal the earnings tax or extend it every five years, starting in 2011. Even with a repeal vote, the tax would be phased out over 10 years.

No matter. Unnerved by the prospect of democracy in action, the council authorized the city attorney to “take any legal actions he determines appropriate to challenge the [repeal effort’s] lawfulness.”

Sinquefield—horrors!—is an out-of-the-closet libertarian who founded an openly free market think tank, the Show-Me Institute.

The council may find a friend in Secretary of State and U.S. Senate candidate Robin Carnahan. In 2008, Carnahan so slowed the validation process for an anti-affirmative action petition that it never made it to the ballot. If need be, the council can also hire certain “community organizers” ready and eager to play whack-a-mole with unallied petition gatherers as they did in 2008.

Unfortunately, whatever the City Council says or does matters much less than it used to. In 1963, when the earnings tax was inaugurated, nearly half the metropolitan population lived within the city limits. Today, less than a quarter does.

Kansas City numbers would be as depressing as St. Louis’ had we not annexed major chunks of productive territory, particularly in the Northland. South of the river is a mess. More than twice as many people once lived within our 1940 borders as do today, and those remaining commit twice as many crimes. Even with the annexations, the city has steadily lost jobs since 1963.

Meanwhile, neighboring Johnson County, an off-the-shelf suburb with a nose for new business, has turned into the metro’s big dog. Since 1963, the county has tripled its population and more than tripled its jobs. Highways that were built to bring Kansas workers into Kansas City now bring Kansas City workers into Kansas.

To be fair, the earnings tax does not explain all of this historic reversal or even most of it, but it does explain some of it. Were job and population loss not an issue in Kansas City, the conversation might not be worth having, but given the arc of Kansas City’s economy, any and all conversations are worth having.

So. Councilwoman Hermann, for instance, treats her constituents like toddlers and the petitions—“very serious threats”—like so much lead paint. “We need citizens to know these aren’t petitions they should be signing,” she hectors us.

Congressman Emanuel Cleaver, who worries more about the polar bear population than the population of his own dying district—again, literally—shares Hermann’s squeamishness about the democratic process.

“The average person, reading about ending the earnings tax, might think that’s a good idea,” he sniffs. “Until the trash isn’t picked up, or the police don’t come.”

Once upon a time, civic leaders trusted their fellow citizens. Indeed, they launched a revolution to assure that those citizens would get at least some say in how the state spent their money.

To help restore that trust, I would encourage them to talk to living, breathing taxpayers, and they could start with a mini-focus group of my wife and me. We live and work in Kansas City, Missouri. We both pay earnings tax, and neither of us likes it. But we also pay property tax and don’t much like that, either. Three years ago, the authorities got our attention by jacking up our property tax 89 percent in one fell swoop.

I had not felt the urge to join a militia that intensely since the 1980s, when some whack job of a judge decided willy-nilly to double our property taxes to reshuffle the deck chairs on our Titanic of a school system.

How do we feel about the land value tax that Show-Me favors? We don’t know. Like just about every other taxpayer, we think the state motto—“Show me”—is an instructive one. Once shown, we’ll assess how any proposed replacement tax affects the interest group closest to our heart—us.

If that tax increases our “contribution” in any significant way, I suspect we will vote against it, regardless of what it does for economic development. If a land value tax proves revenue-neutral or positive chez Cashill, and collects enough dinero to provide basic services, then we will look carefully at its impact on economic development.

Will someone remind me what is controversial about any of this?


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