The e-tax, in case you’ve forgotten last spring’s Keep Kansas City From Getting Worse! campaign, raises about $200 million a year. The city uses the money to pay cops, pick up trash and provide other kind-of-important services. The 1-percent tax on income also assists development districts that receive tax-increment financing (TIF). The Kansas City Fed headquarters — which opened in 2008 under Hoenig’s “leadership,” according his career backgrounder — happens to sit in such a district.
TIF is a powerful tool that more or less traps tax revenue at its source. The Kansas City Power & Light District, for instance, was financed by bonds that are supported by the sales, property and earnings taxes generated at the site. (The district isn't producing as much tax revenue as was expected, forcing the city to reach into the general fund to pay the creditors. But that's another story.)
The Fed built its new headquarters in a TIF district the city created in 1994 to assist with the redevelopment of Trinity Lutheran Hospital. Trinity closed, but the boundaries of the TIF district remained in place.
When the Fed committed to the site, which is between Main Street and Penn Valley Park, the TIF district was in line to receive millions of dollars. Hoenig had ideas about how that money should be spent. He went to the City Council and asked for the TIF dollars to pay for improvements to Main Street and Penn Valley Park.
New sidewalks are great and all. But they cost money, and the money has to come from somewhere. The earnings tax is one of those sources.
At the chamber event, Hoenig seemed to want to make an argument that taxing people's toil is the wrong way for cities to raise money. Fine. But it would be nice to know how Hoenig would provide services to the parts of town where no one wants to build a headquarters.