By Tom Weber, KWMU
http://stream.publicbroadcasting.net/production/mp3/kwmu/local-kwmu-561279.mp3
St. Louis, MO – A new report suggests the City of St. Louis replace its earnings tax with a so-called land tax.
Right now, people who live or work in the City pay 1%; employers pay another 0.5%. The land tax is different from property taxes because it only taxes the land, and not what's built on top of it.
The new study from the conservative think tank Show-Me Institute' follows an earlier report that outlined why the earnings tax drives businesses out of the city.
University of Missouri economist Joe Haslag says a land tax is always the same, no matter how big a building is on the land or how many people work there. But businesses currently might not hire as much because every new person would owe earnings taxes. "That simple economic intuition can account for, in part, the growth in the suburban income relative to the growth of city income," said Haslag, in an interview.
Haslag also suggests a 10-year phase to give people time to adjust, especially because the new tax would leave some people paying more and some paying less than they do now.
Haslag says a number of cities in Asia and also in Pennsylvania (including Pittsburgh) have switched to land taxes and enjoyed economic growth.
KWMU's Tom Weber spoke with Haslag about the report.