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WHAT OTHERS SAY: Tax cut veto override is knockout blow to Missouri's future

Wednesday, May 7, 2014 | 5:11 p.m. CDT

On the website of Missourinet.com is a video shot at a charity mixed martial arts event in Jefferson City last week. One of the fighters, state Rep. Keith English, D-Florissant, opened his bout by kicking his opponent, David Tate of Mexico, in the groin.

On Tuesday, English did pretty much the same thing to Missouri's poor, working poor and most of its middle class.

English, a union electrician elected in 2012 with heavy support from organized labor, became the sole Democrat to side with the House's 108 Republicans, providing the two-thirds majority needed to override Gov. Jay Nixon's veto of a huge and destructive tax-cut bill. On Monday, the Senate voted to override the veto. That means Senate Bill 509 now becomes law. Look out below.

Missouri's race to the bottom in terms of support for education and other state services will accelerate as the tax cuts are phased in over five years beginning in 2017. By 2022, as much as $800 million a year will be cut from an already deeply stressed state budget.

Count on well-connected developers in the tax-credit lobby being first in line. Colleges, universities, K-12 education, social services and corrections can fight for what's left over.

Lopsided victory

The override is a victory for St. Louis mega-donor and conservative activist Rex Sinquefied. Sinquefield believes, without much empirical evidence, that lower income taxes will encourage business growth, even in a state whose corporate tax rate is already 8th-lowest in the nation. If he's right, Senate Bill 509 will create more than enough growth to replace the revenue it eliminates.

But if he's wrong — and the evidence from Kansas, where he promoted even deeper tax cuts, suggests that he is — then even today's Show-Me Mediocrity will be but a distant dream. The 1980 Hancock Amendment will prevent the Legislature from undoing what it has done; it takes a vote of the people to raise taxes.

Eventually Missouri residents will wake up to the disaster that unfolded this spring, but absent a successful court challenge, it could take decades. In the meantime, hundreds of thousands of people will suffer. Schools will turn out graduates massively unprepared for the knowledge economy. College will become even less affordable.

Senate Bill 509’s sponsors emphasized that the cuts won’t take place unless state revenue grows by at least $150 million a year over the high point of the previous three years. That's bogus; it takes $250 million more each year just to stay even.

Some bottom-feeding businesses may find the state marginally more attractive. If your dream is a job in a poultry-processing plant or on a loading dock, you may be in luck. Plus, by 2022 the state income tax rate on your poverty-level job will be 5.5 percent, not 6 percent.

If you manage better than that and your household income is at the state median of $45,321 and you come up with $9,000 worth of deductions, you’ll save $32 in taxes on your adjusted gross income.

The consequences

Of course, your kids' schools will be cruddier. You'll have to pay more for college. You'll see more weeds along the highways, probably more potholes. It may take the Highway Patrol and agriculture inspectors longer to get to you. Little things like that will make the state a much less attractive place to live and do business.

However, if you own or share in the ownership of a business — lawyers, doctors, dentists, mechanics, taco truck operators, major league baseball team owners, etc. — rejoice. You'll be able to deduct 25 percent of the business income that you "pass through" and file as personal income. If your business clears a hundred grand, you'll pay state taxes on only $75,000.

Nationally, some 94 percent of all corporations are pass-through entities. Their owners will be getting a bigger tax cut than the employees who helped create the profits. Don’t put your savings in the bank. Expand your business, otherwise Missouri will wind up like Kansas, which is a good thing in basketball and wheat, but not so much in business activity or credit worthiness.

The lone defector

English, a wiry wireman from International Brotherhood of Electrical Workers Local Union 1, is getting a lot of attention for betraying his party, his union supporters and his working-class North County constituents. Nonetheless, the bet here is that he won’t have any trouble raising money for re-election this fall.

But he doesn’t deserve all the blame. No, there were 108 Republicans in the House and 23 in the Senate who also voted "aye" on the motion to override.

Many of them are from rural Missouri, where the need for state services is high but antipathy toward taxes runs deep. Others are from suburban districts, where there is profound ignorance about the role that fair taxes play in a just society.

For most of these legislators, the saving grace is that when Missouri starts to scrape bottom, they'll be long gone. Term limits will have driven them from the public eye. They won't have to try to fix the mess they made.

Here a special nod to former Republican House speaker-turned-high-priced-lawyer Catherine Hanaway of Ladue. She has announced her intention to run for governor in 2016; she was in the Capitol last week to underscore her support for the veto override.

Should she win, she'll get to try to balance the budget in 2017 and thereafter. Good luck with that.

Blame, too, whatever is left of the sensible Main Street Republican Party in Missouri, the party of former U.S. senators like Jack Danforth and Kit Bond, the party of corporate donors from the Kansas City and St. Louis business communities. They stood by as kamikaze conservatives hijacked their party. When these "corporate leaders" talk about economic development, remember that when it came time to take a stand, they took a powder.

Last year, Nixon was able to turn back an override attempt on an even worse tax-cut bill. He worked it like a campaign. This year, with less time to campaign, the Democratic governor couldn’t turn a single GOP vote, nor hold English. The governor and his supporters in organized labor were outworked, outfoxed and outspent. Now a generation of Missourians will pay the price.

By the way: In that mixed martial arts bout, Tate recovered from being kicked in the groin. But English dropped him a minute or so later. With a straight right.

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


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