Penny-pinching politics

Missouri election season is really starting to kick into high gear, and one of the main issues is the economy—especially in the big cities. More and more people are starting to move out of the cities and into the surrounding suburbs, and the economies in the cities are starting to suffer. There are many factors to blame (education being a large one), and one of the largest is the city earnings tax in St. Louis and Kansas City. On the surface, the earnings tax seems like no big deal, right?

Not so much. An article written by the Show-Me Institute showcases this example: “Consider a Missouri household with an adjusted gross income of $35,000, which is near the 2007 state median. The members of such a household would pay an additional $350 in income taxes each year simply by living or working in Saint Louis or Kansas City.” Okay, $350 that I’d much rather use elsewhere, but it’s not THAT much. It gets better: “If members of this household chose to save the extra $350 they would keep each year in lower taxes, rather than spending it on increased annual consumption, their total household wealth during the following 40 years would be more than $80,000 higher than if they had paid the earnings tax each year. In other words, simply by choosing to live and work a couple miles down the road, the household’s earners would garner more than an additional $80,000 during the course of their careers.”

Now THAT is an eye-opener. $80,000 is a lot of money, even if it’s spread out through 40 years. Imagine if you set aside what you would normally pay in city earnings tax and saved it for your retirement. That extra 80 grand would really make the difference when you’re living on a fixed income.

So even though the 1% tax doesn’t seem like much, you shouldn’t blow it off as an unimportant matter during this election season.

Click here to read the rest of the Show-Me Institute’s article.