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Prop A’s Passage – Effect & Next Step

November 5, 2010

This past Tuesday, voters in Missouri overwhelmingly passed Proposition A.1 Since then I have had a couple of people ask me two questions – What does that mean and what now? Before I begin, let me add a small disclaimer that this answer does not take into account any action in the courts, either pending2 or contemplated, that could potentially change Proposition A’s effects. What does the passage of Prop. A mean? Prop A’s passage has two primary effects. First, Missouri law will now prohibit any city and town that has not already authorized an earnings tax on its residents and businesses from imposing one (i.e., all cities other than Kansas City and St. Louis City).3Second, residents of both Kansas City and St. Louis City will vote on whether to keep or repeal the 1% earnings tax. This vote is currently scheduled to take place on April 5th, 2011. What is the next step? As mentioned, Kansas City and St. Louis City residents will vote early next year on whether to keep or repeal a 1% earnings tax currently imposed on individuals and businesses that either reside or earn income within city limits.4 There are two potential outcomes. Dale Singer from the St. Louis Beacon says it best, “If [Kansas City and St. Louis City residents] vote to keep it, they would be required to hold a similar vote every five years. If they vote to get rid of it, the tax would be phased out over a 10-year period, with one-tenth of 1 percent shaved off the tax rate each year.”5 For those living in Kansas City and St. Louis City, this is sure to be a regular topic of conversation until next April, so before I end I want to provide some additional information for those of you living in those areas: While the greater Kansas City metropolitan area generally includes both Kansas City, MO and Kansas City, KS, only Kansas City, MO imposes an earnings tax. Voters in Kansas City rejected Proposition A by a 55% to 45% margin.6 Voters in St. Louis City also rejected Proposition A, but by an even wider margin, 68% to 32%.7 Nov 2, 2010 General Election: Election Night Map: Missouri Secretary of State, http://www.sos.mo.gov/enrmaps/20101102/ballot_Issue_map.asp?eid=300&oTypeID=24. ↩ Lynn Horsley, Earnings tax measure wins big in Missouri, The Kansas City Star, Nov. 2, 2010, available athttp://www.kansascity.com/2010/11/02/2386110_earnings-tax-measure-wins-big.html?storylink=omni_popular. ↩ SOS, Missouri – Elections: 2010 Approved Initiative Petitions, http://www.sos.mo.gov/elections/2010petitions/2010-077.asp. ↩ Mo. Rev. Stat. § 92.110 (2010). ↩ Dale Singer, Now, earnings tax battle moves to city vote in April, St. Louis Beacon, Nov. 3, 2010, available at http://www.stlbeacon.org/issues-politics/176-Missouri_Issues/106030-now-earnings-tax-battle-moves-to-city-vote-in-april-. ↩ Nov 2, 2010 General Election: Election Night Map: Missouri Secretary of State, supra note 1. ↩ Id. ↩
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