WHAT OTHERS SAY: Sinquefield’s plan to scrap state income tax is lose-lose for everyone

Monday, November 7, 2011 | 4:04 p.m. CST; updated 4:39 p.m. CST, Monday, November 7, 2011

Replacing the state income tax with an expanded sales tax would be great for people with very high incomes. They would gain more in tax savings than the extra amount they would have to spend on food, clothing, vehicles and almost everything else.

Included among those beneficiaries would be Rex Sinquefield, the St. Louis multimillionaire who is bankrolling an initiative petition drive to phase out Missouri’s income tax.

But Sinquefield’s gain would come at the expense of middle- and low-income households, which would not recoup enough in income tax savings to make up for the cost of a higher sales tax on a greater variety of goods and services.

Many seniors would receive no income tax break but would pay much more for daily living purchases.

Sinquefield’s scheme would also create a huge hole in the state’s budget, forcing more layoffs of teachers and other public employees.

Fortunately, a broad coalition is trying to head off a statewide vote on the income tax repeal. Coalition for Missouri’s Future includes education groups, unions, the Missouri Municipal League and civic and business groups.

They plan to ask Sinquefield, a retired investment banker, to scrap his effort of putting an initiative on the November 2012 statewide ballot.

That is a worthy objective. Eliminating or severely restricting the tax on individual income is a popular idea among a select group of economists, theorists and politicians, including Kansas Gov. Sam Brownback.

If put into practice as Sinquefield and his backers propose, the effects would be devastating.

They want to eliminate the tax source that brings in 65 percent of Missouri’s revenue, unconvincingly claiming that getting rid of the individual income tax will cause new businesses to flock to Missouri and produce enough new revenues to close a $3 billion budget gap.

Under their plan, consumers would pay a 5.5 percent sales tax on food, which currently is exempt. Many services would be newly subjected to a sales tax, which in most cases would be capped at 10 percent, with the state entitled to 7 percent of that amount. The state would receive more than half of the tax for its general fund and dedicated purposes. Over time, some local governments could be forced to reduce their existing sales taxes.

Instead of inhabiting a low-tax utopia, most Missouri residents would experience a higher cost of living and decimated state services.

Sinquefield’s plan is a loser for nearly everyone. Let’s hope he can be convinced to spare his fellow citizens from a costly referendum on his personal fancy.

Copyright The Kansas City Star. Reprinted with permission.

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