We pay income taxes at our house because we know that we have to pay for the things we expect government to provide for us at various points in our lives. We’re both retired and we live on a flexible income rather than one popularly described as “fixed.” But Amendment Five nonetheless is more ugly sister to us than it is Cinderella.
I don’t think I can count how many times our legislature has cut this or that tax with the promise that it will bring more businesses to our state, that it will create more jobs, or even that it will keep us from losing another congressman.
If all of those promises were true, our Center State would be bursting with national company headquarters and international trade offices and hundreds of new jobs. But since we aren’t, the solution to the problem might not lie in cutting taxes again.
Supporters of Amendment 5 repeat the same tired promises. They’re bombarding us with manipulative advertising that never addresses the specifics of the proposal. We expect opponents to respond in similar fashion, reminding us again that political advertising and truth are, at best, cousins.
Governor Kehoe has trotted out the moth-eaten Republican statement that, “State government doesn’t have a revenue problem, we have a spending problem, and continuing to spend faster than we grow our economy is not a sustainable path forward.”
So the answer is to cut funding for services Missourians want our government to supply to them? Or to shift the burden of taxation?
How long will we have to wait this time for the economic boom to arrive and everything comes up roses for me and for you, too?
Neither side is taking the issue to the public in an honest and open way. We are awash in competing television commercials—-and some are really, really bad ones—from both sides that do not serve us well.
This is just another issue that is heatedly discussed in the legislature and then dumped into the laps of voters who did not hear and never will hear reasoned arguments for or against this issue.
Eliminating the income tax was a miserable failure in Kansas. We’ve heard some assurances that our plan is different. We’ve been told we should give the legislature permission to make various tax increases of some kind some time. Trust us, supporters are saying.
Comparisons of Missouri and other states are surface comparisons that do not address Missouri’s already-serious shortcomings in funding essential services. The state is still dealing with a half-billion dollar shortfall resulting from a mistaken assessment of the impact of the capital gains tax cut last year. The legislature this year sent Gover Kehoe a budget that was $3.7 billion less than he asked for in January. The governor then vetoed $53 million in spending proposals and froze another $441 million pending arrival of money to put them into effect.
There is no additional funding for our public schools despite the big promises of additional education money from sports wagering. That promise has been made every time we have been asked to approve or expand gambling and every time it has turned out to be a very small drop in a very big general revenue bucket and means nothing when the state pays for education as well as most of our other services and programs. The legislature acknowledged Missourians have been hoodwinked again by gambling interests when it passed flat funding for the public schools this year.
Our state auditor has warned that Missouri is headed off a financial cliff in two years when the surpluses accumulated in the pandemic era will be exhausted. Instead of using that money for one-tine investments, our lawmakers have put a lot of it into ongoing programs that will require ongoing funding—and we’re getting no specifics on what the legislature will do next to pay those additional costs.
The issues of revenue problem/spending problem are not separate and nobody has discovered a way to solve both of them at once.
To put it in breakfast table terms: People whose checking accounts are overdrawn think the answer is to quit their jobs while maintain in some amorphous hopes that their family will find a way to support them.
You’ll have to decide at the polling place if this feels like a good time to be slashing revenues with only vague promises that a painless way will be found to replace them.
The latest Wallet Hub study of state tax burdens ranks Missouri 34th. We’re 33rd in property tax burden, 26th in income tax burden, 35th in total sales and excise taxes for an overall ranking of 34th. Only fifteen states have lower tax burdens than Missouri does.
How about Tennessee, the state that backers of the income tax elimination plan point to? Tennessee is 48th in total tax burden, a level our leaders aspire to. But catch this: Tennessee ranks seventh in total sales and excise taxes. Unless some Missouri economic genius joins with a forestry genius and creates money trees, we’re going to have to be more like Tennessee.
Tennessee’s basic state sales tax is seven percent. Ours is 4.225. Tennessee’s sales tax is applied to tangible personal property, certain services, installation of taxable personal property, lodging, and digital goods sold in taxable form, whatever that means.
While our state sales tax is significantly lower that Tennessee’s, local voter-approved sales taxes can jack up the rate to as much as 12.238% that is charged in St. Ann, higher than local-added sales taxes rate in Tennessee. If Missouri were to raise our sales tax rate to Tennessee levels, St. Ann’s highest-in-the-state sales tax would be more than15%. So comparing Missouri and Tennessee on this issue doesn’t quite seem to fit.
Your observer is not real sophisticated in the nuances of this proposal. But from our place among the common folks, it seems the wisdom of eliminating the state’s biggest tax during our state’s uncertain financial situation needs better explanations that we’ve been getting from the generally awful TV ads and a more definite understanding of who will be affected most by whatever taxes replace the income tax.
Voters would not be out of line demanding a more straightforward and clear description of how this will work to their benefit, especially given the personal financial issues and the personal financial uncertainty they are facing already from the federal level.
A lower income tax won’t mean a whole lot for folks with lower incomes. It appears from our lofty position that proponents have a lot of work to do with that important demographic as well as middle and upper-middle income taxpayers who appear likely to feel the tax shift the most.
Perhaps the best advice is old advice: Vote your pocketbook.
We have one more ballot issue in August—the least controversial one and something we’ve seen before—Amendment 1. We’ll assess it next.