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Center for Economics and the Environment: Policy Series


The cities of St. Louis and Kansas City, Missouri, impose a 1 percent tax on residents’ earnings and non-residents’ earnings within the cities. This paper provides estimates of the effects of these taxes on the parts of Missouri outside the two metro areas. I estimate that over the decade from 2000 to 2010 the earnings taxes in Kansas City and St. Louis reduced household employment in the taxing cities by about 14,500, and by about 34,700 in the Missouri portions of their surrounding metro areas. When the link between the St. Louis metro area and outstate Missouri is considered, the state-wide employment loss from the cities’ earnings taxes rises to 60,500, or about two-thirds of the state’s total employment loss over the decade. In all, about three quarters of the employment losses from the two cities’ earnings taxes were felt outside of the cities themselves, and nearly one fifth was felt in outstate Missouri.

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Howard J. Wall is a Professor of Economics at Lindenwood University, the Director of the Hammond Institute for Free Enterprise and a Senior Fellow in the Center for Economics and the Environment. He would like to acknowledge the helpful comments and suggestions on an earlier draft from Joseph Haslag.

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Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License
This work is licensed under a Creative Commons Attribution-NonCommercial-Share Alike 4.0 International License.