Missouri lawmakers seek to end tax break for poor, disabled

Sunday, September 4, 2011 | 5:31 p.m. CDT

JEFFERSON CITY — The downturn in the economy already had cost Kim Ellis more than half of her clients at her small janitorial business. Her troubles were doubled by her vehicle, which had saddled her with thousands of dollars in repairs and cast doubt on her ability to work after nearly 300,000 miles.

Thanks in part to a $750 state tax credit for certain low-income residents, Ellis has at least solved her transportation problem. She used the money from the state income tax break to pay the sales taxes and licensing fees on the purchase of a newer, used car.

"It helped me quite a bit," Ellis said, "and I would hate for them to take it away."

Yet during a special session that starts Tuesday, Missouri lawmakers are poised to repeal the low-income tax credit that benefits at least 106,000 disabled and elderly residents living in rental housing. The move could save the state $855 million over 15 years, and some lawmakers want to redirect a portion of that money to new tax breaks intended to lure Chinese cargo planes to the St. Louis airport and more businesses to Missouri.

Advocates for the disabled and senior citizens are gearing up to fight the tax-credit repeal. But they may face a tough battle because the elimination of the so-called "circuit breaker" tax credit for low-income renters is the single largest budgetary savings being proposed to offset the cost of the new business incentives.

Supporters of the special-session proposal contend Missouri must do something dramatic to spur job growth — even if it means less money in the pockets of the poor.

"While we're not very happy with the elimination of some provisions that help people in need, we've got to get our people to work if we're ever going to have enough money in the state coffers again to support human need issues," said Herb Johnson, secretary-treasurer of the Missouri AFL-CIO, which has joined the Missouri Chamber Commerce and Industry in backing the plan.

Since 1973, Missouri has offered a state income tax break intended to offset the property taxes or rent payments of low-income seniors. Over the years, that "circuit breaker" tax break has been expanded to also cover the disabled and the surviving spouses of deceased seniors.

For the 2010 tax year, Missouri paid out nearly $117 million in such tax breaks, with about $57 million going to people in rental housing.

Last year, the Missouri Tax Credit Review Commission — appointed by Gov. Jay Nixon — recommended the tax break be eliminated for renters but continued for homeowners under the theory that renters do not directly pay property taxes. Nixon initially opposed the recommendation, saying in December that the challenging economy made it an especially bad time to end the tax break for the poor.

"Maintaining the ability of seniors to get those income-eligible circuit breakers — whether they rent or whether they own — is an important consumer protection," Nixon said in December.

But the Democratic governor has now changed his position. Last week, Nixon said he could support ending the tax credit for renters, so long as an equivalent amount of money is dedicated to be spent on senior services. Nixon said his administration is working with lawmakers drafting the legislation to include a fund earmarked for senior citizen programs.

But state Sen. Chuck Purgason, who hopes to handle the legislation, said the fund amounts to little more than a political gimmick. If it's not immediately the case, politicians would eventually use the money from the dedicated fund to offset cuts in other sources of revenue for senior programs — resulting in little net gain for seniors, Purgason said.

"The reality of it is, if you're going to believe politicians are going to set up a fund and appropriate to senior programs, that is another wool over the eyes of taxpayers," said Purgason, R-Caulfield.

That's what stokes the concerns of people such as Minnie May, 75, who recently sold her house in the southeast Missouri town of Patterson and moved into a small rental home in nearby Piedmont. May, who gets $686 a month in Social Security payments, said she has received about $300 annually from Missouri's homeowner tax credit, which she has used to help pay her bills. Now that she lives in a rented home, May's tax break could be in jeopardy.

May uses an analogy from her farming background to describe her distaste for the legislative proposal.

"When one chicken plucks a feather out of another chicken, all the other chickens do too until there's nothing left of the chicken," May said. "And that's just what these lawmakers are doing, they're taking one feather off at a time until the elderly and disabled have nothing. And there's just no need of it, absolutely no need of it."

Ellis, 43, of south St. Louis County, has received the income tax break for renters because of her disabilities, which include rheumatoid arthritis and fibromyalgia. She calls the proposal to end the tax credit "one of the worst ideas ever."

"I think they're making a big mistake if they were to get rid of it, especially now," Ellis said. "People need something they can depend on."

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Mike Martin September 4, 2011 | 7:12 p.m.

I can think of myriad other programs to cut before whacking a tax break aimed at helping seniors and disabled persons.

If state government wants business in Missouri, it should lower business taxes across the board, rather than trying to pick winners and losers, as appears to be in process with the Chinese cargo plane concept.

Most solid businesses that contribute good jobs and taxes start out small and home-grown -- a concept too few at every level of government seem to grasp. Instead, they run around trying to lure large, mature, out-of-area businesses such as IBM and China, Inc.

In too many cases to count, those "lured" businesses turn around in a few years and pull up stakes, often leaving large, unfulfilled -- and very expensive -- promises in their wake.

(Report Comment)
Lynne Nichols September 4, 2011 | 9:21 p.m.

Instead of cutting a desperately needed tax break, how about cutting the benefits of our lawmakers? I can't help but wonder how many millions of dollars would be saved each year if our elected officials were not given gold-plated health, vision, and dental insurance; plus life and disability insurance at no cost to themselves! Since being a House of Representative or Senate Member is considered a "part-time" job in Missouri (and really how many part-time jobs give benefits like that?!) it would only make sense to cut these EXCESSIVE, expensive benefits first. Lets see our elected officials put up or shut up! It's about time our so called "leaders" felt the pain that the working man feels everyday. These elected officials asked for these jobs and they make more in the per diem alone than the majority of people make working at full-time jobs. I, for one, would like to see some leadership coming from the state house for a change; instead of the governor paying lip service to the public, then cutting the worker-bee state employee postitions and creating more high paying "management" positions and then filling them with his friends, family, and political cronies! Come on Nixon! Grow a backbone and demand some accountability! Start by looking in the mirror!

(Report Comment)
Allan Sharrock September 5, 2011 | 10:08 a.m.

I am curious as the what is the disability percentage that qualifies people for the tax break? Anyone know? Also how were seniors and disabled persons able to survive up until 1973 without this tax break?

(Report Comment)
Mike Martin September 5, 2011 | 10:36 a.m.

As a percentage of real income, taxes have increased dramatically over the years, primarily through a little-known mechanism -- standard and personal exemptions NOT keeping pace with inflation.

These tax increases create the need for constant "safety valves" -- in this case, the tax break for seniors and disabled persons.

When the personal exemption began in 1894 with the first Federal income tax, it was $4,000 -- roughly $85,000 in 2011 dollars.

When the Federal tax was made permanent in 1913, taxpayers single had a personal exemption of $3,000 -- roughly $60,000 in 2011 dollars -- or $4,000 for married couples, roughly $80,000 in 2011 dollars.

The personal exemption today is $3,700 for a single person. That's $3,700 in 2011 dollars. It has not kept pace with inflation.

Personal exemptions in individual states have followed the same trend.
In Missouri, the current personal exemption is $2,100 for a single person. Had it kept pace with inflation, that exemption would be more than $40,000 today.

(Report Comment)
Allan Sharrock September 5, 2011 | 11:10 a.m.

Taxes go up when services are added. When services are added people become dependent on them. When they are withdrawn people cannot cope. They learn to live within the means instead of trying to get into a bracket where they are taxed. Once again how did people survive without all these services prior to them being enacted? I am in Afghanistan and guess what they don't have any of these services and they get a long fine. Why is it that Americans, Europeans, and other wealthy countries feel they must provide everything to every citizen? What is the incentive to get a job to pay for health care when it can be free? Why have we become a culture that pushes our disabled off on the government instead of taking care of them within the family?

Have you guys seen what the USDA classifies as poor? Look it up, if you don't have two TV's and a DVD player you are poor.

(Report Comment)
Mike Martin September 5, 2011 | 1:11 p.m.

@Allan: You were talking about a tax break earlier; now you're talking about services. Two different things.

I'm all for tax breaks for people in need; I'd like to see a broad-based reduction in services people do not need, with a corresponding drop in taxes.

I'd like to see you and your fellow service men and women come home from Afghanistan, pronto. I certainly admire your service, but I don't think the people in Afghanistan are getting along fine.

Finally, as the brother of a severely disabled sibling who lived at home her entire life, my family needed help from both the government and private organizations to keep her at home.

There was no "pushing her off" on the government and there rarely ever is. Government agencies don't offer nearly enough help for disabled persons to accommodate any such pushing off.

(Report Comment)
hank ottinger September 5, 2011 | 4:28 p.m.

Mr. Sharrock writes, " I am in Afghanistan and guess what they don't have any of these services and they get a long fine."

I'd be interested in hearing how Afghanis "get along fine." How's their health care? Access to affordable 24-hour energy? Clean water? Hassle-free neighborhoods? Sanitation? Bomb-free roads and markets? Co-ed education? Religious freedom?

(Report Comment)
Michael Williams September 5, 2011 | 4:57 p.m.

Now, now Hank. All cultures are created equal, dontcha know?

Who are you to define...fine?

(Report Comment)
Ricky Gurley September 5, 2011 | 5:18 p.m.

Hank Ottinger: "I'd be interested in hearing how Afghanis "get along fine." How's their health care? Access to affordable 24-hour energy? Clean water? Hassle-free neighborhoods? Sanitation? Bomb-free roads and markets? Co-ed education? Religious freedom?"

And then Mike said: "Who are you to define...fine?"

And for once I agree with Mike's sentiment, by asking Hank in response to his questions... How's ours?

And add, our health care actually SUCKS!

With the natural disasters we have had, we can't honestly say that everyone over here has access to 24-hour energy; can we?

Clean Water? Okay, maybe we actually are in "utopian bliss".....

Hassle Free Neighborhoods? Really? What with the SWAT Raids and Local Neighborhood Code and Compliance Inspection "Gangs".. Really? Are we much better off in this regard...?

Sanitation? "Utopian Bliss", again I suppose....

Bomb Free Roads and Markets? Well, our roads may be "bomb-free", but they are from from "pothole free"....

I could rattle on, but I don't think it would be of any use.. The point is, we don't have it quite as good as some of the "die hard, we got it made no matter how hard our government screws us types" might want to believe we do...

There are countries looking at us and saying the same thing about how bad we have it over here too.. It is all subjective...

Ricky B. Gurley.

RMRI, Inc.
(573) 529-0808

(Report Comment)
Allan Sharrock September 5, 2011 | 8:38 p.m.

We Americans define access to health care, clean running water, and continuous electricity as necessities. Believe it or not since in the last several years private companies have set up clinics and the locals are happy with the services. As with the water I wouldn't classify it as clean but a lot of that has to do with them trashing it up. They boil the water to use it and have done that for thousands of years. It is not up to me to degrade a culture and say that somebody who lives in a mud hut is somehow less off than I am. I have learned that by working in at least two third world countries. When in reality they have made it work for them. As for the bombs.. well Ya that is a issue.

Mike: I classify a tax break and a tax to provide a service as the same thing. They both cost something.

(Report Comment)
jackie jones September 5, 2011 | 11:18 p.m.

As someone who has received the rent tax break for years and relies on it for basic needs, the most a person can receive is a once yearly $750 dollars. It takes the amount of rent you pay for the year, the amount of money you bring in, social security and you use a chart to determine. I pay one of the lowest rents, 520 a month and I receive the full 750. Big whoop. Doesn't go far but it helps when all my money goes to bills and nothing is left.

(Report Comment)
Jim RS September 6, 2011 | 9:17 a.m.

Time to write to our legislators....If that doesn't help FIRE THEM!!!!

(Report Comment)
jackie jones September 7, 2011 | 12:25 a.m.

done! thanks jim. i wrote nixon, hope that is right?

(Report Comment)

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