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WHAT OTHERS SAY: Low state taxes don't benefit Missourians

Wednesday, April 4, 2012 | 4:02 p.m. CDT

In 1980, Missouri voters passed the Hancock Amendment to the state constitution, which limited the legislature's ability to raise state revenue beyond a threshold of 5.6 percent of an individual taxpayer's income.

At the time, the combined local and state tax rate in the state, on average, was 8.6 percent. That placed Missouri 34th in taxes in the nation.

That's a generally fair ranking for Missouri, considering its relatively low cost of living and its mix of urban and rural communities.

But a lot has changed in three decades.

The Hancock Amendment was meant to be a check against unfettered spending by lawmakers, punishing them — and rewarding taxpayers with refunds — if the state spent too much. However, in today's "no new taxes" political atmosphere, Hancock's revenue limits are but a dream.

Today, Missouri still is ranked 34th, according to the conservative Tax Foundation, but it's not because state taxes have kept pace. The overall local and state tax burden for Missourians was 9 percent in 2009, the last year for which the foundation has complete numbers. The tax burden has been shifted to local taxpayers as the state abdicated its responsibility for paying for services it mandates.

That message was made crystal clear in an audit released by state Auditor Tom Schweich last week, examining Missouri's compliance with the Hancock Amendment.

For the fiscal year that ended June 30, state tax collections were $4 billion below the threshold allowed by the Hancock Amendment.

That's billion, with a "b."

That's a full 17 percent of the state's $23 billion budget.

That's $4 billion in potential revenue, keeping the state under a restrictive revenue cap set all the way back in 1980, that, to some extent, our lawmakers are leaving on the table.

To be fair, much of that money simply is lost to the state budget because of the tough economy.

But it's impossible not to see the disconnect when lawmakers are talking about taking health care away from blind Missourians when they have let many tax dollars slip through their fingers.

Here's the number that really puts Missouri's low-tax status in perspective. According to Schweich's audit, Missouri's per-capita state tax rate is 3.8 percent. Based on state-by-state per-capita tax rankings in fiscal 2009 (fiscal 2010 figures aren't yet available), that makes Missouri the lowest tax-collecting state per capita in the nation. Missouri was No. 45 just a year ago.

You've heard about the race to the bottom? Missouri won.

What's the prize for winning that race?

One obvious result: Higher local taxes. Local governments must pay for what the state won't.

There's also a sputtering economy, some of the lowest rankings in the nation for spending on education, public health and other essential public services, and roads and bridges that are so bad that some officials want to sell Interstate 70 to the highest bidder.

If low taxes were an economic panacea, Missouri would be thriving. It's not.

The numbers don't lie. Missouri isn't investing in its future, and our residents are suffering for it.

A lot of folks purchased Mega Millions lottery tickets last week dreaming about what they could do with $640 million. Imagine what $4 billion would do for Missouri.

Copyright St. Louis Post-Dispatch. Reprinted with permission.


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Comments

Jeff Meier April 12, 2012 | 3:40 p.m.

I find this article to be too pessimistic as to the current state of affairs in Missouri. It also leaves out many likely sources for economic malaise in this state.

First the roads issue. According to the 2010 Urban Mobility Report published by the TX Trans. Institute at Texas A&M, St. Louis is one of the least congested cities in the US. St. Louis ranks 3rd best amongst the 31 largest metro. Kansas City's congestion situation is even better. This agrees with my observations as I travel this nation. In St. Louis the I-64 improvement project was done very efficiently and effectively winning the grand prize in 2010 from The American Association of State Highway and Transportation Officials. It looks like we are doing pretty well with roads at this time.

Second let’s take a look education. I find the correlation with education spending and results not to be as high as implied in this article. Many reports like this show little correlation with spending and results http://www.cato-at-liberty.org/chart-of-.... I propose that it is more effective use of our current resources that is needed more than an general increase in spending. Missouri also is currently achieving some great results with education at our current level of spending. When it comes to SAT scores in 2010 we ranked 2nd in Critical Reading, 6th in Math, 2nd in Writing and 4th Overall. Missouri is also in the top 15 states when it comes to graduation rates. This was from the University of Missouri Extension in 2009. Not bad for a state that on average spends less than some.

Instead of raising taxes and spending today I recommend that MIZZOU prepare a report like the Indiana Community Asset Inventory and Ranking from Ball State for Indiana. This report can be found here http://cms.bsu.edu/academics/centersandi.... It is a detailed comparison of counties within Indiana. A report like this could be used by individual communities and the state to help focus on issues that government can fix and understand some of them it cannot. If you look at job growth around the country Indiana is 10th in the nation and in my opinion one similar to Missouri when it comes to regional location and natural resources yet is more successful.

When I examined a list of states with the best job growth around the country it appears to me several other factors are at play. Some states that are successful have oil resources that are being exploited with the current high prices. Some states also have right to work laws that appear to be attracting employers over the ones with more restrictive employment laws. However, it is not only the tax rates that are important, but how expensive compliance is with those and other laws in the state.

If Missouri wants to see more job growth we need to examine how each community in our state functions compared to the nation as a whole and the world that we compete with.

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