Square Coming to Saint Louis City, but Not to Its Property Tax Rolls
Square, a tech company founded by a Saint Louis native, has generated significant fanfare by announcing a new office in Saint Louis City. While the growth of the tech industry in the city and region is certainly positive, the incentives city officials granted the company have further damaged the city’s ability to create a business- and resident-friendly tax policy. Because while Square may be coming to Saint Louis, it is avoiding the city’s tax rolls.
For starters, Square’s new office is located at CIC@4240 in the Cortex Innovation Community, which is already a TIF district, meaning that the company will add little if anything to the city’s hollowed-out real property tax base:
Worse yet, as the Post-Dispatch reported, the city plans to grant Square $3 million in industrial development bonds, which the company will use to buy equipment. This city action means Square will have access to cheaper credit than it otherwise would, and may not have to pay sales taxes on equipment. But it also means that the city becomes the lessor (and Square the lessee) of expensive industrial equipment, allowing the company to dodge property taxes on its equipment as well.
The effect of these incentives is that Square’s impact on the city budget will be mostly in the form of the earnings tax, the same earnings tax that city officials have claimed they are trying to move away from. This latest tax break is just another in a long line of giveaways that make beneficial reform nearly impossible.
The city claims it needed these incentives, and all of these incentives, to compete for Square. But how does the city expect to experience broader growth by granting favored companies special dispensations from an uncompetitive and inconsistent taxing system? Is it any wonder that after decades of this policy, the Saint Louis City is still among the slowest-growing large cities in the United States?