Tax Shuffle Could Shake Up Missouri

| April 29, 2013

moneyFrom Stateline, April 29th

JEFFERSON CITY • Missouri’s Republican-led Legislature is poised to send Gov. Jay Nixon a bill that would cut the state income tax, especially for small businesses, while raising the sales tax to benefit three legislative priorities.

It would be the biggest change in the tax code in decades and the first step toward political mega-donor Rex Sinquefield’s goal of moving Missouri to a system that taxes consumption rather than income.

But Nixon, a Democrat, signaled last week that he would veto the bill. The governor repeated his position that the plan would shift the tax burden from corporations to seniors on fixed incomes and “is not the right approach to growing our economy or creating jobs.”

What’s more, if Republicans were hoping to override a gubernatorial veto, those hopes were dimmed last week when 19 Republican House members balked at the bill. The 90-68 vote fell 19 votes short of the two-thirds majority that would be needed for an override.

“I’m not one of those people who is too anxious to change the way things are going, especially when it comes to raising sales tax and barely reducing income tax,” said Rep. Don Phillips, R-Kimberling City, and one of the opponents.

Those dynamics could set the stage for negotiations with Nixon as the Legislature heads into the final three weeks of the legislative session. The bill’s sponsor, Sen. Will Kraus, R-Lee’s Summit, said that although he was happy with the House version of the measure, he was open to changes that could help win Nixon’s support.

With the May 17 adjournment date looming, Kraus said he hoped to take up the bill today after giving fellow senators the weekend to look over the House changes.

“My goal is to get something across the finish line, have the governor sign it and have some major impact for the state of Missouri on tax policy,” Kraus said.

SINQUEFIELD STARTED DEBATE

Though he’s playing a behind-the-scenes role, Sinquefield moved the issue to the front burner.

About seven years ago, he retired from his investment company and returned to his native St. Louis from California. He began making five- and six-figure political donations to advance his ideas to revamp the tax code and public education.

The drive for a tax cut picked up steam this year, after Kansas eliminated taxes paid by many small business owners.

Sinquefield helped finance a group called Save Missouri Jobs, which aired television and Internet spots calling on legislators to come up with a strategy to keep Missouri employers from moving across the state line.

Though they say they didn’t draft it, Sinquefield’s lobbyists have been working the Capitol’s hallways for the Kraus bill.

“It’s progress,” said Woody Cozad, a former Missouri Republican Party official who represents Save Missouri Jobs. “We’re for anything that makes the state more business-friendly, especially for small business.”

Category: NC SPIN Perspectives - Opinions from NC Leaders & Organizations

Comments (1)

Trackback URL | Comments RSS Feed

  1. dj anderson says:

    There are NC parallels, but there is no moral high ground for either party.

    While it was Democrats in NC who put tax on food, and put the state tax at the high rate of just under a nickel, and allowed local sales tax to add on another four cents or so, it is now Republicans who want take it a step further.

    Which party is going to watch out and work for the average little guy? Neither as it stands, but with the Democrats out of power, they are the ones who have to complain and try to rein in the ambitious Republicans in power. Again, there is no moral high ground for either party.

    The Democrats are not used to being out of power after a 100 years of it, and the Republicans are not used to being in power after a 100 years of not having it. The NC Republicans are starting to look like drunken sailors finding harbor after a long voyage at sea, while the Democrats are becoming whining, begging step-children.

    The sales tax is regressive and should never have been instituted, especially by Democrats, but it was, and our party has to live with that.

    NC was the 2nd state to enact a sales tax in 1933. It was 3%.

    In 1971, under Bob Scott, the Democrats allowed local sales tax to be added of 1%, probably with Republican support?

    In 1983, Gov. Hunt & Democrats allowed another 1/2% for the local sales tax.

    In 1986, Gov. Martin & Democratic Legislature allowed another 1/2% for the local sales tax.

    In 1991, the Democratic Legislature under Republican Gov. Martin, raised the state sales tax from 3% to 4%.

    In 2002, Gov. Easley & Democratic legislature allowed another 1/2% for the local sales tax.

    My history above is not complete, for at the drive through here in Raleigh, I pay 8%, at least, maybe 8.5% 4.75% is state sales tax.

    My point is that while I think the sales tax is regressive and should be eliminated entirely (convenient as it is to collect) the Democrats started it and the Republicans are wanting to extend it. Wrong on all counts.

    I could accept even higher sales tax if a formula were developed so that every citizen who files a return could get back ALL the figured average sales tax paid on the first $50,000, say, being just over the mean household income. Yes, tax rate would have to rise and rise sharply, putting the burden on those making more than $50,000. I can live with that as being fair by leaving the poorer paying less.

    The big Democrats and big Republicans, especially, would wail and groan at that sales tax structure, but not the little struggling worker or the fixed income SS person.

    Until then, we Democrats can’t be hypocritical and pretend to stand on higher moral ground, until the Republicans add as much sales tax as we have done. But we can humbly hang our heads in shame and start calling for an end to regressive sales tax, confessing we were wrong to have started it to begin with.