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WHAT OTHERS SAY: Don't trade Missouri's income tax for a higher sales tax

Thursday, December 1, 2011 | 2:16 p.m. CST

At the outset of an essay in support of eliminating Missouri's income tax, the main advocates acknowledge an important fact:

"By most measures, Missouri is not a high-tax state."

St. Louis businessman Rex Sinquefield and his co-author, Jack Naudi, go on to argue that a no-income-tax model will position Missouri "to catch the next wave of growth and business expansion."

But we believe the proposal would be a disruptive and potentially dangerous tax shift, putting more of the burden on lower-income and middle-income residents.

It would lead to a dramatic increase in the state sales tax — capping it at 7 percent (compared to the current rate of 4.225 percent).

It would lead to a much broader set of goods and services being subject to the sales tax — chief among them, would be a sales tax on food that could be as high as 5.5 percent.

It could starve state government of needed money — with critical implications for education funding and a host of other important programs.

And it would limit the ability of local governments to raise money as it would cap the total sales tax at 10 percent. That will inevitably put more pressure on governments to turn to the property tax as a source of revenue.

These ideas are embodied in various versions of petitions developed by Let Voters Decide, a nonpartisan coalition being primarily bankrolled by Sinquefield, a retired billionaire investor who has been long active in supporting conservative causes and candidates in Missouri.

Through an aggressive advertising campaign, Let Voters Decide is trying to build support for an effort to gather signatures on petitions. If they gather enough signatures, they can force a statewide vote on a constitutional amendment to end the income tax by 2016.

In a 2009 essay featured on their website, the proponents argue that because the income tax lowers net pay, workers have less of an incentive to work.

They point to data showing nine states without an income tax have shown faster job growth than other states. And while they don't claim the difference is entirely due to tax policy, they say it is a factor when businesses and individuals choose where to grow and live.

In particular, Let Voters Decide uses Tennessee as an example of the benefits of no income tax. They cite statistics showing that in 1997, Missouri's per capita gross state product (the value of goods and services produced) was higher than Tennessee's average. By 2007, those positions were reversed.

What they are not telling you is that by 2010, Missouri's per capita GDP was once again higher than the rate in Tennessee.

What's more, during the recession, Tennessee's unemployment rate peaked a full percentage point higher than Missouri. In September, Tennessee's unemployment rate was at 9.8 percent — while Missouri was at 8.7 percent, below the national average of 9.1 percent.

One more statistic: The nonpartisan Tax Foundation ranks Missouri 16th on its list of best state business tax climates — better than any of its neighboring states, including Tennessee, which ranks 27th.

As the advocates themselves acknowledge, Missouri is not a high-tax state.

Trading away the income tax for a higher sales tax is an unnecessary, disruptive and potentially dangerous step.

It is unclear how aggressive the Let Voters Decide petition drive is at this point, but if you are approached, we urge you to respectfully decline to sign.

We don't need a constitutional amendment. Voters already decide who serves in the governor's chair and in the General Assembly.

Leave the decision on proper tax and spending levels in their hands.

Copyright Springfield News-Leader. Reprinted with permission.


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Comments

Jimmy Bearfield December 2, 2011 | 12:38 p.m.

What we really need at both the state and federal levels is an alternative minimum tax that prevents any taxpayer -- regardless of income level -- from having zero liability. You need to pay for what you use. No more free rides.

(Report Comment)
Michael Williams December 2, 2011 | 1:17 p.m.

A state or national sales tax in lieu of income taxes will NEVER happen.

Such a thing puts tax revenues squarely in the hands of consumers....that means you and me. If I don't buy, there is no tax. If there is no tax, there is no receipt of money by gov't.

I am cynical enuf to believe this will never be allowed.

(Heck, I believe EVERYONE, on paydays, should be issued FULL checks including their tax liabilities for income, FICA, FUTA, medicare, and state. At that point, citizens must write checks for those items to the various agencies. I want EVERYONE to see the money appear in their bank accounts, and I want EVERYONE to write the checks or click the computer-transfer button. I believe we will ALL start to pay more attention to our gov't, and we will be better citizens and stewards of this country.)

(PS: that won't happen, either)

(Report Comment)
Jimmy Bearfield December 2, 2011 | 1:37 p.m.

"I believe EVERYONE, on paydays, should be issued FULL checks including their tax liabilities for income, FICA, FUTA, medicare, and state. At that point, citizens must write checks for those items to the various agencies. I want EVERYONE to see the money appear in their bank accounts, and I want EVERYONE to write the checks or click the computer-transfer button. I believe we will ALL start to pay more attention to our gov't, and we will be better citizens and stewards of this country."

Agreed. You can always tell when people have never written $5K or $10K checks to the state and feds four or five times a year because they're ones who say, "But taxes are the lowest in decades!" or "We're actually undertaxed" or "I don't mind paying higher taxes." Well, go ahead and pay more than what you owe. I guarantee that the government will deposit the check.

(Report Comment)
Corey Parks December 2, 2011 | 2:59 p.m.

I have always thought the same thing. We have to write a check for utilities, car insurance, mortgage, insurance, health insurance, IRA, life insurance and many other things why not make SS something that people sign up for and contribute to if they want. Sure they can set it up to do automatically but people actually writing those checks to the IRS would more then likely making them pay just a little more attention to whats going on. I know I do every time I hand over more money to them.

(Report Comment)

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