JEFFERSON CITY — The Missouri House advanced legislation Wednesday that would exempt remote workers who live outside St. Louis city limits from paying the city’s 1% earnings tax.
The measure, which was approved on a 100-47 vote, stems from a lawsuit involving workers who sued after the city denied their earnings tax refunds during the pandemic shutdowns of 2020.
Rep. LaKeySha Bosley, D-St. Louis, said the legislation amounts to an attack on a primary economic driver in the state.
“It is just picking on St. Louis. Pick. Pick. Pick,” Bosley said.
“We’re not picking on St. Louis. We’re just saying, ‘Follow the damn law,’” said Rep. Jim Murphy, a south St. Louis County Republican who is sponsoring the proposal.
“We just don’t agree on this issue,” said Rep. Steve Butz, a south St. Louis Democrat.
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The Missouri Court of Appeals in St. Louis heard the city’s appeal on Feb. 14 of a St. Louis circuit judge’s ruling that ordered the city to pay back six plaintiffs.
Butz said the legislation should be put on hold until the appeals court rules.
“This bill would gravely injure the city of St. Louis,” Butz said. “If you vote for this you are putting a mortal dagger into the city.”
Prior to the pandemic, the city issued refunds to thousands of taxpayers for days traveled and worked outside St. Louis.
But as more employees began working remotely during the COVID-19 pandemic, Collector of Revenue Gregory F.X. Daly in 2020 began refusing refunds. He said employees were still using remote work software provided by companies based in the city.
The 1% levy currently applies to city residents and nonresidents whose employer is based or operating in the city.
Murphy’s legislation states that by Sept. 30, the city would be required to establish a process for requesting earnings tax refunds for remote work performed outside the city.
If the city refuses to refund taxes for covered work, the employee would be able to file a lawsuit to recover money owed, along with attorney’s fees.
A nonpartisan analysis said the state wasn’t able to determine how much remote work was performed by nonresidents. But it said that if all nonresidents worked entirely remote, the city could lose up to $98.3 million each year.
The city reported nearly $219 million in net earnings tax collections last fiscal year, according to the analysis.
The proposal now heads to the Senate for further debate.
The legislation is House Bill 1516.