‘Dja ever notice how taxes may be inevitable, but they’re more inevitable for some of us than for others?
The poorest 20 percent of Missourians pay 9.4 percent of their income in state and local taxes. In fact, the bottom 80 percent of us all pay around 9 percent in state and local taxes. Once someone makes it into the top 20 percent of income, though, the percentage he pays begins dropping, and the wealthiest 1 percent pay only 5.6 percent of their income in state and local taxes. Whatever the opposite of a graduated tax structure is, this state’s got it.
Of course, the reason the poor and middle class citizens pay such a hefty chunk of their resources isn’t our income tax, it’s property taxes and those regressive sales taxes. (I don’t vote for sales taxes. Ever.) Whereas if you look just at state income tax, then yes, the structure is graduated. It goes from .5 percent for the poorest to 4.5 percent for those earning more than $350,000 a year. So the problem isn’t with the income taxes, then, right? No, not right. Missouri’s income tax structure is awful. If it were more fair, local communities wouldn’t need to soak poor and middle class people with such high property taxes and sales taxes.
Rep. Jeanette Mott Oxford (D-St. Louis) explained at the recent West County Dems meeting that our income tax is outdated, unfair, and inadequate. Every year she introduces a bill that would remedy the situation, and every year the Republicans smother it in committee. Two years ago, Nathan Cooper (sentenced last December to 15 months in the pen for fraud: there is some justice), Bryan Pratt and Brian Yates harassed her witnesses, one of them to the point of tears.
So, what does Rep. Oxford think is wrong with our tax structure? For starters, it was initiated in 1931. As in 77 years ago. In 1931, anyone making the munificent annual salary of $9,000 was taxed at the top rate. And we still are. If your taxable income (what’s left after exemptions) is $9,000 or more, you’re in the top bracket. Bet you didn’t realize you were wealthy enough to belong in that rarified atmosphere. Oh, $9,000 is a lot of money, or at least it was in 1931. Back then, that much would have been comparable to making more than $300,000 annually in today’s money.
We’re a tad overdue to have the income brackets refigured. What we need to do, says Oxford, is cut income taxes for the poorest and raise them on the wealthiest.
Instead, we just keep piling those sales and property taxes on those of us who can least afford them. You wouldn’t require your five year old to carry all your packages while you walk around the mall. He won’t be able to do it. And if you’re shopping for his back to school clothes, he may only get two outfits for the year. Same idea applies to the state budget.
Consider: median income in Missouri is only $38,000. Would you have believed that half of us make less than that? So this five year old who’s trying to carry around the state budget, he’s kind of puny for his age.
And he can’t carry enough packages for, say, decent teacher salaries. Our teacher pay rates are 46th in the nation. The pay of employees at state social services agencies is 50th in the nation. That’s just pitiful. And it isn’t necessary because Missouri isn’t that poor.
But whenever there’s an appropriations hearing in Jeff City for some worthy cause or another, the script is likely to go something like this:
Social Do Gooder: Our state is stuck dealing with more tobacco related health problems than other states because we do nothing to counter the more than $1.6 million a day in tobacco ads here.
Hard Hearted Legislator: True. Who do you want us to cut spending on to pay for education programs about the evils of tobacco?
Or this scenario:
Social Do Gooder: We have many more beds in veterans’ centers than we’re able to use. We have the need for those beds, but we can’t use them because we don’t have money for more nurses.
Hard Hearted Legislator: True. Who do you want us to cut spending on to pay for more nurses for veterans’ centers?
Missouri has a $22 billion budget annually, and somewhere between $3-5 billion in social services has been cut in the last ten years. Something like $4 billion out of $22 billion is a sizeable chunk, so obviously our tax structure, despite its heavy burden on 80 percent of us, is delivering inadequate funds.
Rep. Oxford’s plan (HB 2131) would bring in an additional $1 billion a year by making these changes:
bottom 20% (less than $16,000): 2-3% cut, $225 less on average
2nd 20% ($16,000-27,000): 1.1% cut, $240 less on average
middle 20% ($27,000-47,000): .2% cut, $78 less on average
4th 20% ($47,000-77,000): .3% raise, $159 more on average
Next 15% ($74,000-134,000): 1.0% raise, $979 more on average
Next 4% ($134,000-343,000): 1.5% raise, $3,015 more on average
Top 1% ($343,000 or more): 2.1% raise, $20,992 more on average
A billion more every year, huh? We could sure use that money. Those changes would actually get Missourians paying close to a flat tax instead of sloughing the burden onto those least able to pay it.
Not that Rep. Oxford’s bill has a prayer, of course. You do understand that, right? But looking forward to the day when Democrats might again control the lege and the mansion, Oxford wants Democrats–many of whom quiver with fear at the thought of suggesting we raise anybody’s taxes–to start educating our voters about what we need to do.
Unless and until they do, that puny five year old is going to keep staggering around the mall.
Statistics in paragraph one come from the Institute on Taxation and Economic Policy, September 2007