Many strange things are done under the Capitol dome down in the city of Jefferson. Few of them have struck me as stranger than Chris Kelly’s vote in favor of the Republican plan to replace the state income tax with a higher and wider sales tax.
So I asked him in an e-mail to explain. I must not have been the only questioner, because his electronic newsletter this week provides that explanation. As you’d expect from the senior member of our local delegation, it’s a fact-filled, thoughtful discussion. It leaves me unpersuaded.
Here’s a summary of his argument:
He begins by noting that “Most Democrats believe, almost as an article of faith,” that the progressive income tax is the best way to raise public revenue. In Missouri, our state income tax provides 49 percent of the state’s revenue. However, he points out, our income tax isn’t really all that progressive.
To be clear, a “progressive” tax is one that hits the wealthy harder than the poor. A “regressive” tax – the sales tax, for example – does the opposite. The democratic (and Democratic) rationale for the former is that the wealthy have benefited the most from our capitalist system and so can and should contribute the most to support it. Or, as Joe Biden famously if imprudently put it, paying higher taxes is patriotic.
In Missouri, the income tax rate peaks at 6 percent for everybody with taxable income of $9,000 or more. When you look at the total state tax burden – including income, sales, excise and property taxes – Chris informs that the bottom 40 percent of families in 2007 paid 9.6 percent of their income in state and local taxes. The top 20 percent paid less than 8 percent. And the top 1 percent, with incomes averaging more than $1 million a year, paid 5.8 percent in state and local taxes.
Overall, then, we enjoy one of the most regressive tax structures in the nation. The question is what, if anything, to do about that. The logical answer would be to reduce taxes on the poor and increase them on the rich. Missouri’s political history, however, reveals no appetite in the legislature for that kind of logic.
Instead, Republicans including Chris’ predecessor in office, Ed Robb, want to amend the constitution to eliminate the income tax on individuals and corporations and replace it with a sales tax that has virtually no exemptions and even covers services as well as goods. The version Chris supported – and his Democratic colleagues from Boone County along with nearly all the House’s other Democrats opposed – increases the sales tax from 4.225 percent to 5.11 percent.
This, the supporters say, would yield roughly the same revenue as the taxes to be eliminated.
The arguments for a sales tax have always been that it’s broad-based, relatively easy to collect and hard to avoid, and that it taxes consumption rather than work. Studies and referendums have shown that most people dislike sales taxes less than they dislike income taxes. To me, those arguments make a good deal of sense.
The counterargument, that the sales tax generally shifts the burden disproportionately from the rich to the poor and is therefore fundamentally unfair, makes even more sense.
Chris knows the arguments and knows the politics. He says that what he really wants is a study of the possibility and the consequences of such a tax shift. He also wants the sales tax rate to be adjustable, not just one time as the constitutional amendment provides, to allow revenues to increase to meet future needs. And he wants monthly payments to low-income families to offset the higher sales tax they’d be paying.
House Joint Resolution 36, which he voted for, doesn’t do any of the things he wanted. So why did he vote for it? His explanation: “ My rationale? To have a seat at the table with a credible hand to further develop its provisions ….”
That’s a long table, Chris. The House vote was 90-65.* You’ll be seated near the foot. The Republicans who’ll hold the gavel are much more likely, I’m guessing, to use your presence as “evidence” of false bipartisanship while they roll right over you.
Chris Kelly is a smart guy. He represents us well. I’m just afraid that this time, on an important issue, he has outsmarted himself.
We’ll soon see.
George Kennedy is a former managing editor at the Missourian and professor emeritus at the Missouri School of Journalism.