Abby Hoover
Managing Editor

The Missouri House of Representatives will have a new committee aimed at reviewing and evaluating earnings taxes in the state of Missouri.

Missouri House Speaker Dean Plocher (R-St. Louis) announced the creation of the new Special Interim Committee on the Earnings Tax this week, which will be tasked at looking into the earnings tax across the state, with a primary focus placed on St. Louis’ earnings tax and its effect on the outlook for the region.

To head up the committee, Speaker Plocher has selected St. Louis County area Rep. Jim Murphy (R) to serve as the chair, and Ben Baker (R-Neosho) to serve as vice chair. The following representatives have also been selected to serve on the committee as members: Ben Keathley (R-Chesterfield), Wendy Hausman (R-St. Peters), Tony Lovasco (R-O’Fallon), Mike McGirl (R-Potosi), Marlon Anderson (D-St. Louis), Steve Butz (D-St. Louis), and Maggie Nurrenbern (D-Kansas City).

The Earnings Tax is one percent tax on salaries, wages, commissions, tips and other compensation paid to a person that lives or works in a designated city, such as St. Louis or Kansas City. According to the City of St. Louis, the City’s earnings tax makes up 36% of the general revenue.

In Kansas City, the earnings tax generates approximately 45% of the General Fund revenue, about $292.2 million annually, and funds basic operations like repairing roads and weekly trash collection, police officers, firefighters, paramedics and ambulance services. Revenue from the earnings tax also helps fund snow removal, codes inspection, historic preservation and other city needs.

The E-Tax returns to the ballot for renewal in municipal elections every five years. In 2011 voters 

renewed the tax with a “Yes” vote of 78%, in 2016 at 77%, and most recently in 2021 at 77%. 

Kansas City and St. Louis have some of the lowest E-Tax rates at 1%, compared to cities like Philadelphia at 3.8%, Pittsburg at 3%, Detroit at 2.4%, Lexington at 2.25%, Louisville and Portland at 2.2%, Cleveland at 2%, and Indianapolis at 1.77%. Many of these cities also have different rates for residents and non-residents.

“The work of this committee will be invaluable as we continue to look at how our citizens are being taxed in this state,” Plocher said. “As costs rise and more Missourians are facing financial difficulties, it’s more important than ever to look at the data and have a meaningful discussion about these taxes, and see just how they are affecting Missourians as well as employment and economic growth in our state. The Missouri House has made a commitment to ensure that the overall tax burden on our citizens does not force families into making tough decisions, and I know that this committee will put in the work to find out the best way to ensure that our taxes are low, fair, and effective.”

For more information on Kansas City’s E-Tax, visit kcmo.gov/city-hall/departments/finance/earnings-tax.