Saint Louis County Sales Tax Pool Under Fire Again

The annual debate about the Saint Louis County sales tax pool is being treated more seriously this year in the legislature, according to reports I have read and heard. In short, the proposal to abolish the sales tax pool and allow any city that chooses to become a point-of-sale city has a real chance of passing.

In Saint Louis County, any point-of-sale cities that had local sales taxes predating the county’s general tax are allowed to continue to keep the majority of the sales taxes collected within the city, and are required to share a portion of the taxes with the pool. Cities that did not have local sales taxes predating the county tax, or which voluntarily chose in the early 1990s to become part of the tax pool, must now add all of their sales tax collections to the pool, along with the contributions from point-of-sale cities, and distribute the taxes to the various cities based on population. Eliminating the sales tax pool (or just destroying it by allowing cities to join and leave anytime they want) would be a poor policy choice for Saint Louis County. We need to expand the sales tax pool, not eliminate it.

Bear this in mind when considering the issue: All of the major eminent domain controversies in Saint Louis County have occurred in point-of-sale cities. The large majority of retail-based use of tax-increment financing (TIF) in Saint Louis County occurs within point-of-sale cities. As the East-West Gateway Council of Governments has documented, this use of TIF has not led to real economic growth in our region, just the proverbial rearranging of deck chairs.

So, if we know that point-of-sale cities abuse eminent domain more, and wastefully use TIF more, wouldn’t we want fewer point-of-sale cities, rather than more?

The sales tax pool is not “socialism,” as some of its detractors have called it. This is all about what happens to money once it goes to the government. The debate is strictly about which government gets it. I could go on and on about this, frankly, and will be happy to do so in the comment section if anyone should desire. Until then, please check out the op-ed I wrote four years ago, which still applies perfectly.

We need to expand the sales tax pool, not rescind it. The system in which cities keep all of the sales taxes generated within their boundaries incentivizes the abuse of property rights, over-emphasizes retail at the expense of other business groups, and perpetuates the idea that governments and their faulty plans for interventionist “economic development” are good for our society.