The guy who conducted this study, Professor Haslag, conducted a study for the Missouri Bankers Association in 2004 that said the state treasury needed to put more taxpayer money in Missouri banks in the form of deposits at a below market rate of interest. The result, Haslag said, would create more jobs and enhance monetary policy. No credible economist shared Professor Haslag's views on that study... I wonder if the same is true for this study. Please consider who is paying Professor Haslag when weighing the credibility of this study.

Yes, but you have to take his evidence at face value--he is not making up his results when, for example, he reports mean differences in economic growth rates (per capital income, employment earnings) based on earnings taxes. I don't understand all the parts of his analysis (particularly the modeling that he does in the latter half of the study); however, my initial reaction was whether a more robust test of the impact of earnings tax could be used. Certainly, the regression equation he uses is much underspecified and as a result the relationship it reports might be covering for other factors.

Will Winter

I agree with Will's first impression. There are probably some omitted variables that should have been considered, although I'm not quite sure what.

But does anybody really think the earnings tax will go away given the current fiscal stresses the City of St. Louis is facing?

The only way to replace the earnings tax would be to increase property tax and/or sales tax rates ridiculously and dramatically. It would also help to cut back on tax abatement and TIF, but that's a whole other study entirely.

I will tell you that as a person living in a non-tax abated house, I'm more than p-o'd when we get our $2,700 real estate tax bill for a 3 br southside house, compared to the folks purchasing expensive homes in rehabbing neighborhoods getting tax abatement.

There are lofts being re-sold for over $500,000 with tax abatement. The original purchases were around $250,000-$300,000 with tax abatement.

Our $2,700 in annual real estate taxes buys us the same level of public services as someone getting tax abatement.

I can see tax abatement for entry level housing in depressed neighborhoods. But tax abatement for housing selling over $300,000 seems like abuse.

I don't think it is abusive at all. The tax abatement does not go on forever, it gives great incentive for folks to build NEW homes in the city, mostly in areas that nobody would want to move into.

If this program did not exist, there would be much less interest in moving to the city, and where would we be in ten years anyway? Most likely, worse off than ever.

But, with this program, the city has ten-twelve years to turn around the exodus and stabilize and regrow its neighborhoods. This program is Smart, Progressive Public Policy at its best.

And these folks spend more dollars in the city boosting sales tax revenue.

Seems like a chicken and egg scenario.

Is a $200,000 dollar home without tax abatement worth more or less than a $200,000 home with tax abatement?

Payments are higher on the home without tax abatement (factoring in the cost of real estate taxes), so maybe its worth more, thus not deserving of tax abatement.

And if this logic seems confusing, you can understand why some people get frustrated with the system.