I was struck by something that Digby posted today on the DailyKos:
Voting isn’t just about making good things happen for yourself and your family. It’s about voting against things that will make your lives worse. And if this Republican party — at this point in history — wins big over the next two years, the lives of average Americans will definitely be worse.
No sooner had I read this than
came face to face I received an email that brought it home to me; I received a newsletter from my State Representative, the Boy Scout from GOP Hell, little Andy Koenig (who is, sadly, unopposed this year). His big news? He and his buddies are going to try again with that GOP golden oldie, the “Fair” tax. Their rationale:
When designing a tax structure we would never pick the system we have today. Taxes do damage to whatever you are taxing so we need to pick a system that does the least amount of damage. If you tax productivity you will have a society that is less productive. The tax that does the least amount of damage is a consumption tax.
The least amount of damage! Although, if you’re wealthy and don’t mind being subsidized by the middle class and poor, perhaps you agree. Specifically, this soon to be revivified version of HJR 71, which was sponsored by Baby Andy last session, would do the following:
1. The individual income tax will be eliminated over 5 years.
2. Corporate income tax will be eliminated in 1 year.
3. The Corporate Franchise tax will be eliminated in 1 year.
4. The sales tax will be capped at 7% and be broadened in scope to keep the
5. Service providers such as plumbing, painting, and lawyers, will have a sales tax.
6. Sales tax on used goods will be eliminated. (Used cars, used boats, used items)
7. Each Missourian will receive a prebate. (A prebate is an estimated return based on the money spent in sales tax to achieve $2,800 dollars in tax free spending per person or $11,200 for a family of four.
8. Exemptions will be made for business to business transactions, insurance (includes a reverse exemption), tuition for K-Higher Education, gasoline, and charitable donations.
Currently state sales taxes are 4.225%; this tax may be augmented by counties and cities so that total sales taxes in the city of St. Louis are 9.421%; in Franklin County, 7.975%; in St. Charles, 8.40%; etc. Will city and county taxes still be appended to the 7% sales tax proposed above or will they have to be adjusted to come in under the cap as HJR 71 specified? The effects could be unbelievably painful – particularly if, as seems quite likely, Rex Sinquefield’s gift to his wealthy cohorts, Proposition A, becomes law.
Certainly, although the plan Koenig lays out promises lots of goodies, he doesn’t deign to discuss revenue, which is probably all to the good since, from his supply side of the economic chasm, it would all be speculative fantasy. The Missouri Budget project estimated that had the prototype for this legislation, HJR 71, passed last session, in order to maintain the revenue stream, Missouri sales tax would have had to be raised to 11% and all services would have had to be taxed – a level of uniform taxation that, as that the Missouri Budget Project points out, no other state has enacted. Of course, since the folks who’ll get soaked under this proposal aren’t those who finance political careers, it may not be such a big deal for dear little Andy.
I’m guessing that the best solution according to our baby GOPer would likely be spending cuts – and we have all seen what GOP budget cutting mania has done to the state over the past year. There’s little left to cut without destroying the viability of the state – although, on second thought, that might be the goal – a little shock doctrine and Missouri could become very attractive for corporations who want to exploit the suffering to set up sweat-shops.
Koenig’s arguments for dragging this moribund idea into the light once again is the perennial chestnut that states without an income tax experience greater economic growth than those that tax income. This argument has been exploded time and again, but proponents of the fair tax keep dredging it up with only slight variations. Arguing against HJR 71 earlier this year, Amy Blouin of the Missouri Budget Project, offered detailed refutations of such claims, concluding that:
What the data do indicate is that there is no correlation between state individual and corporate income taxes and economic growth. State rates of economic growth and taxes vary considerably and there is no common pattern to make assumptions from. Many recent national studies back this up.
To bolster his arguments, Koenig does try to offer proof of his contentions; he cites a study issued by the conservative American Legislative Exchange Council, Rich States, Poor States, by Arthur B. Lafer (yes, that Lafer), Stephen Moore, and Jonathan Williams, a standard in supply-side circles, which attempts to correlate states’ economic competitiveness with income tax rates.
If you were to take a look at that study, you could not be blamed if you were to experience a sense of bemusement. The relatively high position occupied by a state like Wyoming compared to New York’s low competitiveness ranking suggests that perhaps the authors bias their results by asking only part of the question that needs to be answered; income tax alone is not really the only determinant in play though this and similar studies operate from that assumption. As the political scientist and statistician, Andrew Gelman, notes apropos this study, “economic performance can be defined in different ways.” and, if one wishes to obtain a complete picture, definitely should be.
Such considerations, of course, seem to be beyond poor, ideologically driven Andy and many of his pals in Jefferson City (although to be fair, HJR 71 failed even the GOP smell test). Unfortunately, as I noted above, we can’t send Andy home this election, but we can try our best to make sure that he doesn’t have the back-up he would need to wreck this kind of havoc on the already ailing Missouri tax system. At the very least, with enough Democrats in office, we wouldn’t have to have this silly discussion over and over again.