GUEST COMMENTARY: Reducing tax rates and investing in education: We can have it both ways

Tuesday, August 20, 2013 | 8:41 p.m. CDT

If you’ve been minding Missouri’s political “goings-on” lately, you have no doubt heard about Gov. Nixon vetoing the first income tax cut in nearly 100 years. The governor would like you to be naïve enough to believe that if the state reduces its tax demands from citizens and small business that funding for critical investments, like education, will plummet. I’d like to share a couple facts with you to consider as you make an informed decision on whether or not you feel Missouri’s tax rates should be adjusted in favor of the people.  

  1. The General Assembly decides how much money is appropriated to the various interests of the state, not the governor. Can the governor choose not to spend those dollars? Yes, but doing so is his choice only when actual revenues fall below anticipated revenues. His proactive withholds from education he recently announced are wrong, but that philosophical and constitutional debate is one we can have separate from the tax debate.
  2. Projections from the Department of Elementary and Secondary Education are being taken as gospel. However, they assume that a series of events (like the federal government passing and implementing online sales tax collections coinciding with Missouri’s participation in that scheme) will occur and therefore cause large reductions in funding to the state. Furthermore, bond ratings companies fired off a letter that falsely quoted that taxpayers could retroactively receive tax breaks, further declining Missouri’s revenue prospects. Retroactive laws, according to the Missouri Constitution, are not legal which makes this assumption impossible and overwhelmingly distorts the analysis in revenue forecasts that credit ratings agencies have provided and that the Missouri Association of School Administrators has distributed to its members.

That being said, I would strongly caution anyone from blindly accepting the figures distributed by the governor’s office. Let’s assume however, that there is an actual reduction in state revenues (economics suggest that as tax rates are reduced, citizens are more productive and actually pay more in total taxes, but let me give progressives the benefit of the doubt, just for this once). The governor has made it clear that if the legislature overrides his veto he will continue to withhold funds from various programs. Moreover, the governor suggests that future funding will not be there for the aforementioned investments. This has stirred up a great debate, but it is one that takes far too much for granted.

For example, I have not heard anyone ask why the governor would not look for other savings in the event the state’s income declines. According to the Missouri Accountability Portal, Missouri spent, in fiscal year 2013, nearly $17 billion on programs. The remainder - roughly $8 billion - goes to other “needs” of the state — leases, communication equipment, landscaping, housekeeping, vehicles, etc. Yet, the Governor has not suggested that in the event that revenues fall that we will tighten our belts and spend less on these items! The state purchased $305,000,000 in “supplies” last fiscal year, $26,000,000 went to “travel”, nearly $1,000,000,000 was allocated to “property and improvements” and over $200,000,000 went to “miscellaneous expenses” like food provided by state agencies!

It is easy to say that education will be harmed if revenue drops. After all, it is the second-largest driver of the budget each year. However, I do not believe for one second that this state operates so efficiently that we cannot find savings elsewhere. So while the debate continues let’s have an honest discussion about fair tax rates. Don’t just surrender to the Governor’s scare tactic of false choices between being “pro-kids” or “pro-taxpayers.” We can have it both ways.

Rep. Paul Curtman, R-Pacific, represents Missouri's 105th House District, which includes parts of Franklin County.

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Mark Foecking August 21, 2013 | 3:48 a.m.

"economics suggest that as tax rates are reduced, citizens are more productive and actually pay more in total taxes"

Actually that is a myth, and has been roundly debunked by many economists. The only reason they can appear to is that these cuts have been made at the federal level without a corresponding reduction in spending, and the added deficit spending becomes stimulus. These cuts are the major reason for our high debt.

Missouri cannot by law deficit spend, so any cuts will have to be matched by corresponding cuts in spending. This will largely wipe out any supposed economic benefit of a tax cut.


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