Location determined by(1) Skilled Workforce(2) Limited Bureaucracy (Permit

Processing)(3) Infrastructure(4) Quality of Life factors – Crime, Climate(5) Cost of Business – Housing, Utilities.. “Tax Incentives and Tax Packages are

uniformly viewed as low priorities by location experts.”

Broad-based (limited Loopholes) Clear and Transparent Equitable Easy to Administer with High

Compliance Limited change in Behavior (no

Distortions) User Tax – users pay tax; no free

rider problem

Applies to both city and county dwellers working in St. Louis City, and who use city facilities/services. 70% of payment live outside the City. As a result, the tax works well as a user fee, and is broad-based with few exceptions.

No free riders 1% implies limited distortive behavior. Cities with

earnings tax average 2%. Tax incentives that induce location movements are typically 30% or more.

Very easy to Administer and collect Equitable as it is a wage tax. Clear and Transparent

Possible Impact of 1% tax is likely negligible on behavior.

Any other tax will be less broad-based as it will not be user based, will be free riders and more exemptions. As a result, the city faces large increases in taxes and greater distortions, particularly in the transition phase.

A land tax is not equitable, and there will be significant rent-seeking to avoid tax.

Additional academic work finds “tax rate no predictive power for business location (Devereux and Griffith, 1998; Bartik, 1985,Bus, 2001,

“The bulk of studies report little in the way of strong support for the view that state taxes have important effects on business location within the US”, AER 95.

Enterprise Zones don’t work, Dowall, 2001, Elvery, 2009 and Greenbaum and Landers, 2009.

No Academic work on Earnings Tax Any study would have to account for most

Earnings tax cities are in North East/Central Regions, which hit by Manufacturing and Demographic Shocks

Over Decade, STL City Employment fell 8.5%. County fell by 9.9%.

Since 1969, per capita income of St. City same as other counties in MO. NO impact

MO and STL lags behind in small business lending. Receiving aprox. 1/3 the micro and small business loans given its income.

No Large Difference between STL and other Regions

AreaName Per Capita Income Income Missouri state total 1969 2007 Change 1969 2007 Change 00-07 St. Louis (Independent City), MO 3567 33964 2.25 16551136 2E+08 2.49 0.21 Cape Girardeau-Jackson, MO-IL (MSA) 3392 29724 2.17 2181583 10571569 1.58 0.25 Columbia, MO (MSA) 2735 29273 2.37 193909 2722593 2.64 0.32 Fayetteville-Springdale-Rogers, AR-MO (MSA) 3068 32661 2.37 276844 5288271 2.95 0.54 Jefferson City, MO (MSA) 2570 31586 2.51 375720 13728577 3.60 0.27 Joplin, MO (MSA) 3175 31202 2.29 299112 4529608 2.72 0.28 Kansas City, MO-KS (MSA) 2859 27243 2.25 325752 4659706 2.66 0.29 St. Joseph, MO-KS (MSA) 3960 39222 2.29 5615060 77716802 2.63 0.24 St. Louis, MO-IL (MSA) 3256 28552 2.17 380167 3592726 2.25 0.27 Springfield, MO (MSA) 4022 39278 2.28 10022864 1.1E+08 2.40 0.34 Branson, MO Micropolitan SA 3013 29416 2.28 627490 12343292 2.98 0.32 Farmington, MO Micropolitan SA 2808 27305 2.27 64108 2107049 3.49 0.32 Fort Leonard Wood, MO Micropolitan SA 2647 24143 2.21 98722 1515248 2.73 0.51 Fort Madison-Keokuk, IA-MO Micropolitan SA 3546 35751 2.31 192240 1583776 2.11 0.18 Hannibal, MO Micropolitan SA 3365 28969 2.15 172403 1243300 1.98 0.22 Kennett, MO Micropolitan SA 2955 27687 2.24 106876 1052208 2.29 0.22 Kirksville, MO Micropolitan SA 2167 25449 2.46 74193 804412 2.38 0.16 Lebanon, MO Micropolitan SA 2487 23135 2.23 67913 664062 2.28 0.31 Marshall, MO Micropolitan SA 2629 24456 2.23 52629 864438 2.80 0.20 Maryville, MO Micropolitan SA 3147 28871 2.22 79429 652878 2.11 0.19 Mexico, MO Micropolitan SA 2508 22867 2.21 57105 504431 2.18 0.16 Moberly, MO Micropolitan SA 3300 26289 2.08 84710 679026 2.08 0.27 Poplar Bluff, MO Micropolitan SA 2927 25230 2.15 66158 646767 2.28 0.27 Quincy, IL-MO Micropolitan SA 2225 28208 2.54 76058 1163005 2.73 0.24 Rolla, MO Micropolitan SA 3424 31118 2.21 280543 2390043 2.14 0.32 Sedalia, MO Micropolitan SA 2415 27718 2.44 71061 1176428 2.81 0.21 Sikeston, MO Micropolitan SA 3048 27145 2.19 104653 1106086 2.36 0.25 Warrensburg, MO Micropolitan SA 2550 28189 2.40 85947 1147422 2.59 0.32 West Plains, MO Micropolitan SA 2865 25267 2.18 96783 1311326 2.61 0.54 Cape Girardeau-Sikeston-Jackson, MO-IL (CSA) 2395 23797 2.30 56737 918653 2.78 0.27 Kansas City-Overland Park-Kansas City, MO-KS (CSA) 2675 28943 2.38 279856 3870015 2.63 0.28 St. Louis-St. Charles-Farmington, MO-IL (CSA) 3921 38774 2.29 5767531 79482878 2.62 0.29 Cape Girardeau-Jackson, MO-IL (EA) 4002 38946 2.28 10121586 1.12E+08 2.40 0.24 Columbia, MO (EA) 2338 27064 2.45 591415 7936798 2.60 0.27 Fayetteville-Springdale-Rogers, AR-MO (EA) 3029 29874 2.29 941337 14547015 2.74 0.34 Jonesboro, AR (EA) 2460 30803 2.53 439554 15303563 3.55 0.32 Joplin, MO (EA) 2289 25650 2.42 633384 7794760 2.51 0.32 Kansas City-Overland Park-Kansas City, MO-KS (EA) 2817 26794 2.25 869187 9844123 2.43 0.51 Omaha-Council Bluffs-Fremont, NE-IA (EA) 3683 36431 2.29 7161485 94018044 2.57 0.18 Peoria-Canton, IL (EA) 3783 39759 2.35 3143295 40689955 2.56 0.22 Springfield, IL (EA) 3754 34186 2.21 3140972 29521817 2.24 0.22

Earnings tax is nearly a third of city revenue.

How many Police and Fireman are you willing to fire? How many potholes not fixed, bridges not maintained and streetlights turned off?

Infrastructure and Quality of Life are important factors of doing business. This will suffer.

No Tax is Perfect, but this one WORKS.