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Columbia Missourian

Missouri House prepares for debate on 'fair tax' resolution

By Spencer Willems
April 10, 2009 | 6:47 p.m. CDT

COLUMBIA — As Missourians finish up tax returns, Missouri lawmakers will try to begin debate on whether to eliminate the state’s income tax.

If House Joint Resolution 36 passes in the House and Senate, voters would get to decide in 2010 whether to abolish the state’s corporate, estate and income taxes.

Because the measure is a resolution and not a bill, it would bypass the approval or veto of the governor, and the issue would be decided directly by the people.

State Rep. Chris Kelly, D-Columbia, joined House Republicans and other advocates in supporting the replacement of state income, corporate and estate taxes with a 5.11 percent sales tax on both tangible goods and services. Missouri’s current sales tax is 4.225 percent.

“I believe we can get this thing out of the House — this year,” Kelly said. “Hopefully, (state Rep. Ed Emery) and I will be able to hold some meetings over the interim. … We need to vet the public on this issue.”

A handful of Republican lawmakers have sponsored the so-called “fair tax” legislation in Missouri for the past two years, but it never reached the House floor. The resolution now sits on the House calendar to possibly hit the floor this week and has advanced further than any of its fair-tax predecessors.

“I’ve expected some real progress on this one,” Kelly said. “And it’s absolutely important that this issue is getting some attention.”

By supporting the resolution, Kelly has picked up where his election opponent and former state Rep. Ed Robb left off. During the past two years, Robb was an outspoken proponent and co-sponsor of the fair tax.

Although Kelly and Robb disagreed on many things over their close and costly campaign last year, they see eye to eye on this issue — almost.

“I totally reject the ‘fair tax’ label,” Kelly said. “It is fallacious and (is) there for political reasons.”

Even though he doesn’t like the way Robb and other Republicans label it, Kelly agrees that placing state taxes on consumption and not income is necessary for Missouri.

“Every party has its sacred cows,” Kelly said. “Democrats are right about education; Republicans are right about this sales tax.”

Kelly said he would rather see a more progressive state income tax but doesn’t think that will happen anytime soon. In a move that some are calling pragmatic, Kelly has become one of the few Democrats statewide who will be pushing for the resolution over the remaining weeks of the 95th General Assembly.

Proponents of the measure think a new tax system is more pertinent than ever as Missouri’s economic growth slows.

“There is no more powerful economic development tool than tax reform that actually empowers the folks that are producing and creating jobs,” said Emery, R-Lamar. “That’s what the fair tax does: It puts the financial power back in the hands of businesses that create jobs. … It gives people their money back.”

Emery has been the heavy lifter for the fair-tax issue. In 2007, he wrote Missouri’s first fair-tax legislation. He tried again in 2008 with little visible progress, but that didn’t stop him from pushing the issue again this year.

“(Robb) and I knew that legislating a change this big would take time,” Emery said. “We have to educate the public on the merits of the fair tax and what it would do … as well as other legislators.”

When he filed the original incarnation of the resolution, then-House Bill 814, Emery attracted 31 co-sponsors, more than double that of the past year’s bill. Kelly was one of two Democratic co-sponsors.

The Republican representatives supporting the legislation include such party figures as Budget Chairman Allen Icet of Wildwood, Majority Caucus Secretary Marilyn Ruestman of Joplin and Majority Whip Brian Nieves of Washington, Mo.

“I am available and supportive conceptually of what (Emery) is doing with this,” Nieves said. “The fair tax at the federal level is something I support, and at the Missouri level, it is something I’m very much behind.”

State Rep. Joe Smith, R-St. Charles, chairs the Tax Reform Committee that passed Emery’s legislation back in mid-March and is doing his best to educate other House members before the resolution comes to the floor.

“The fair tax is something I am personally committed to,” Smith said. “I am very confident (the resolution) will get through the House this year.”

As the resolution went through its early phases, Emery and Kelly hoped the tax issue wouldn’t turn into a partisan fight. But when the House Rules Committee voted on passage of the resolution to the floor, the only votes against it came from Democrats.

“Apparently, it is going to be a very partisan issue, but I do think that we are going to get a number of Democratic votes,” Emery said. “I had hoped it would not be partisan, but politically, it might be in our favor since it is such a popular issue.”

Kelly said he realizes he’s in the minority of his party but hopes fellow Democrats will be willing to have an open debate.

“(The legislature) has to be economically rational when they consider this,” he said. “It’s important (for Democrats) to be rational and willing to re-evaluate what they believe.”

Robb is excited about the gains the issue is making.

“Everyone wants to see it come to floor for debate,” Robb said. “I think it can pass in the House. It will be more interesting in the Senate.”

If the House passes the resolution, it will go to the Senate, where members might be less familiar with the issue. Robb said he doesn’t see why the largely Republican Senate wouldn’t pass the measure.

“The fair tax has a high probability of getting through the process,” Robb said. “After all, it’s the people who will decide this, and not the politicians.”