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Earnings taxes and personal property taxes subject of House Ways and Means hearing

April 7, 2021 - The House Ways and Means Committee, chaired by Rep. Wayne Wallingford, heard HB 688, sponsored by Rep. Jim Murphy, that would prohibit cities from levying earnings taxes on income of workers that are working from their homes outside the city limits.


AIM president and CEO Ray McCarty testified in support of the bill. He pointed out he had contacted the City of St. Louis Collector's Office early in the pandemic to ask how workers were to be treated that were working from homes outside the city since the income was earned entirely outside the borders of the city. The City subsequently changed the refund forms that normally allow workers who are working outside the city to obtain a refund of earnings taxes for such days to bar refunds for workers working from their homes outside the city. McCarty said the City took it one step further by requiring supervisors to sign any refund form filed by the employee indicating they had not counted days worked from home as days for which the earnings taxes could be refunded.


"This is simply wrong under current law, but the City of St. Louis has chosen to impose their earnings tax on income earned entirely outside their borders," said McCarty. "The City of Kansas City correctly allowed refunds of their identical earnings tax, but the City of St. Louis chose to inappropriately tax this income," said McCarty.


A court challenge has been filed on the issue but has not yet been decided.


Also on Wednesday, the Committee heard HJR 57, sponsored by Speaker Pro Tem John Wiemann, a proposed constitutional amendment that would eliminate personal property taxes over 5 years, if approved by voters statewide.


McCarty testified in support of the joint resolution on behalf of Associated Industries of Missouri, telling the Committee business personal property taxes were a burden on infrastructure investments made by Missouri companies. Unlike other states that may abate such taxes to encourage infrastructure investments by companies, such exemptions are not allowed under the Missouri Constitution. This measure, he said, would boost Missouri's ability to compete for such investments.


Action was not taken on either bill at the hearing, but a vote on either bill could happen next week.

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