In October I reported that my State Representative, Andrew Koenig (R-88), was crowing about reviving the fair tax initiative that limped into obscurity last year. The plan is to eliminate the state income tax and replace it with a regressive sales tax.
Sure enough, the newly-minted Speaker, Rep. Steve Tilley (R-106), has identified the sadly misnamed fair tax as one of his big legislative priorities (right along with busting unions via right-to-work legislation). Not surprisingly, the Wonkroom reports that Mr. Tilley – who ran unopposed – is in receipt of some $200,000 in campaign contributions from one Rex Sinquefield. Looks like Sinquefield was gunning for bigger game even before he was sure that the $11,218,000 that he spent was going to snare enough voters to pass Prop. A.
Proposition A has the potential to decimate the budgets of Kansas City and St. Louis, but eliminating the state income tax will amount to a blitzkreig on the poor and middle class in the entire state:
Completely eliminating the Missouri income tax would cost the state about $6 billion, when the state is already facing a nearly $1 billion shortfall in its 2012 budget. Missouri business groups are also pushing the new GOP legislature to repeal the state’s corporate income tax, costing another $500 million.
When the fair tax was proposed last year, the Missouri Budget Project demonstrated that sales taxes would have to be uniformly raised to 11% to compensate for the lost revenue (think about adding 11% onto the price of your next new car, onto your grocery bill, and to just about everything else that you buy). The fair tax plan outlined by Koenig, which is, I presume, the plan that Tilly endorses, specifies that the sales tax will be no more than 7%. Given that Missouri sales taxes currently vary from 4.25% to 9.421% in different jurisdictions, it is difficult to see how this tax alone will compensate for lost revenue. You think that budget cuts have been draconian this last year? Just wait and see what happens if this piece of rotten tripe becomes state law.
And who will the fair tax affect the most? The great majority of Missourians whose incomes cluster somewhere in the vicinity of the $42,000 median and the 13.5% below the poverty level will feel the pain for sure, while the state’s rich business movers and shakers who pour money into GOP coffers will dance all the way to the bank with big returns on their investment. To add insult to injury, middle-class and poor Missourians are already carrying the state’s rich schmucks on their shoulders; the Wonkroom’s Pat Garofalo observes that:
Missouri already has a slightly regressive state tax system; those in the lowest income quintile can expect to pay about 10 percent of their income in state and local taxes, while those in the top one percent will pay about 5.4 percent.
And what has letting the big guys and corporations off the hook done for the state so far? Have any of you missed the fact that Missouri isn’t exactly a dynamic place to live and do business? Does anyone really think that when the state is a wholly owned subsidiary of Rex Sinquefield Inc. – which it seems well on the way to becoming – our lives will be vastly improved?