JEFFERSON CITY — State Sen. Kurt Schaefer, R-Columbia, today pre-filed legislation to repeal an outdated one-percent local income tax imposed on anyone who lives, works, or has a business in the city limits of St. Louis or Kansas City.  Often referred to as the “earnings tax,” this is a third layer of income tax on top of state and federal income taxes.

“The earnings tax is outdated, dysfunctional, and certain provisions are clearly unconstitutional,” said Schaefer. “These cities are in direct violation of the Commerce Clause of the United States Constitution, and repealing this tax will increase wages for more than a million hardworking taxpayers in Missouri. This is a harsh double-tax on productivity that is severely restricting employment, investment and growth in our state’s two largest cities.”

In May, the United States Supreme Court held in Comptroller v. Wynne that a similar tax in Baltimore, Md., was unconstitutional, finding that it improperly penalized interstate commerce. Speaking for the majority, Justice Samuel Alito wrote that Baltimore’s local income tax was “inherently discriminatory and operates as a tariff, which is fatal because tariffs are the paradigmatic example of a law discriminating against interstate commerce.”

Schaefer first introduced the idea of repealing the earnings tax over the summer, when St. Louis and Kansas City tried to bypass the legislature with a $15 local minimum wage rate. In a letter to his Senate colleagues, Schaefer wrote, “If the goal of the proposed minimum wage hike is to put more money in people’s pockets to later spend in the local economy as stated by Mayor Slay, the best way to accomplish this is to allow the more than 12,000 businesses and all of their employees to keep an extra one percent of their paychecks.”

While the General Assembly successfully overrode the governor’s veto to temporarily stop local minimum wage hikes, Schaefer remains concerned about pending statewide ballot initiatives that could raise Missouri’s state minimum wage rate to $15 an hour.