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DAVID ROSMAN: New tax bill is a trap

Wednesday, April 20, 2011 | 1:31 p.m. CDT

The “Fair Tax” is back on the table and, again, I believe it is a burden on the lower and middle economic classes.

HJR 8, the "Missouri Jobs and Prosperity Act," is designed to phase out the state’s income tax and replace it with a sales tax of no more than 7 percent. At first blush, this does not sound bad. Anything that will increase my spendable income is a good thing, right? Well …

Let me start with information from the Missouri Budget Project, a nonpartisan, nonprofit, public policy analysis group. It is the group's assessment that the actual effective state sales tax rate would have to be as much as 12.25 percent, plus the local rates of about 2.75 percent, to make up for the revenue lost by eliminating income tax. That looks like Columbia would need a 15 percent sales tax to me.

Though the bill states that taxes taken in before and after passage will remain the same, the Joplin Independent reported that to be tax-revenue neutral, the state sales tax would have to be 12 percent, 5 percentage points higher than proposed. The Missouri Budget Project estimates that the current proposed rate will also cause an additional $3 billion state budget shortfall, requiring even deeper cuts to the state budget than we will see in 2012.

The proposed amendment would require the sales tax on almost everything we purchase. The key here is “almost everything.” There are three main exceptions:

  • Gas and diesel fuels subject to the excise tax.
  • Premiums for personal insurance policies
  • Property purchased and taxes paid prior to enactment.

Here is the real problem. The new tax rate does not distinguish economic classes at the time of the sale. So add an additional 10 percent to the cost of prescriptions, the weekly grocery bill, the new home, the recreational vehicle, the lawn seed, and the list goes on.

More important is that most items that are currently tax-exempt will become taxable, including many of the foods that are either not taxed or have a limited tax. For example, here in Columbia the current food sales and food use tax for the state are set at 1.225 percent, but they would increase to 7 percent if this resolution passes. Also, your electric and water bill, for which you currently pay no sales tax, would see an additional 7 percent added.

The new sales tax would include prescription medications and doctor visits, including emergency room visits, making this tax especially hard on the elderly, those on fixed incomes and the growing number of uninsured individuals and families in Missouri.

Because of this lack of economic distinction, the hit will be to the lower economic echelon of our population, for it digs deeper into their income. For example, a family of four, regardless of economic class, will spend about the same amount for groceries each week. However, that additional $6 to $10 per $100 may prevent the low-income shopper from buying milk or making a healthier food choice. 

Finally, “The Fair Tax” and the “Missouri Jobs and Prosperity Act” are evasive words hiding the true purpose of the law: to place the burden of the state revenues on the middle and lower income citizens of this state.

To borrow from Jay Leno, it is designed so the poor have to do more with less and the rich have to do less with more.

I urge the state representatives from Columbia and state Sen. Kurt Schaeffer to vote no on this resolution. I urge you to write your representatives and Mr. Schaeffer clearly stating your opposition to HJR 8.

David Rosman is an award-winning editor, writer, professional speaker and college instructor in communications, ethics, business and politics. You can read more of David’s commentaries at InkandVoice.com and New York Journal of Books.com.


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Comments

Harold Vanderboegh April 20, 2011 | 8:58 p.m.

HJR-8 would increase Missouri's tax base and have dynamic positive effects on our business environment for promoting growth and development. It would attract companies to Missouri that are fleeing other high income tax states. The best way to help a poor family is to bring jobs back to Missouri. BUSINESSES HIRE PEOPLE; FAMILIES ARE MADE UP OF PEOPLE! The overall positive impact of HJR-8 on Missouri businesses and our state’s overall economy, and therefore our poor and middle class would be huge. The opposition to HJR-8 are heavily funded by the Tides foundation which is heavily funded by George Sorros and Teresa Hines Kerry. This gives opponents who are artists at employing scare tactics like the Missouri Budget Project cart blanche to all the major publications in the state. Jim Moody and Amy Blouin are purveying very dangerous fear mongering false assertions and predictions that are divisive and a major disservice to our state’s businesses as well as its citizens; especially the middle class, the working poor and the unemployed. The poor and middle class would fare far better under the 7% capped sales tax proposed in HJR-8 with its tax rebate provision which untaxes them, and prevents all the scary calamity contained in the rhetoric spewed by the MO Budget Project. Their assertions are just down right lies. Tennessee has a 9.225 total sales tax rate with no income tax, and they are running off and leaving Missouri behind in job growth, economic growth, and population growth. MO and Tennessee's GDP are very similar, though Missouri once out paced them big time. Tennessee only taxes 35% of their GDP. MO HJR-8 would tax 45% of MO's GDP. So the Missouri Budget Project's crazy scenario of a 12% tax rate is nothing but misleading propaganda designed to scare people from even considering getting rid of the evil corrupt income tax system.

(Report Comment)
Paul Allaire April 21, 2011 | 8:35 p.m.

I cannot imagine that an employer would choose not to locate in Missouri because it taxes personal income rather than sales, as do most states. Harold might do well to reflect on who is attempting to use scare tactics.

(Report Comment)
H Fritz February 22, 2012 | 5:08 p.m.

Harold is exactly correct. I just read today that Kansas is passing a consumption Tax to take effect Jan. 2014. If Missouri does not see the hand writing on the wall they soon will when this goes in effect.
I am in the fixed income bracket and support this. The reason for the prebate removes the objections stated in MR.Rossman's
column. It also will collect more revenue from those who now deal in cash so show no income. This will increase the collected revenue that nobody see in the existing income tax system Pass this please.

(Report Comment)

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