I definitely recommend this piece in today’s Columbia Missourian discussing the growing support for Missouri’s “Fair Tax” proposal, which would replace the state’s income tax with a higher sales tax. (Link via Monsieur Combest.)
I don’t recommend it only because it quotes the Show-Me Institute’s executive vice president, Dr. Joseph Haslag — although it does, which is pretty cool. There is also a great, and perfectly accurate, comment from Democratic state Rep. Chris Kelly, about the current sales tax laws:
Kelly sees his support of a consumption tax as a continuation of the 11 years he spent trying to remove sales tax exemptions. He likes the consumption because he says it is “efficient and universal.” He sees the current tax code as riddled with exemptions and favors for the very wealthy and the very powerful.
“If you own a big boat, I mean a big boat, I mean you’re a party dog … you can get your boat exempted from the sales tax by effectively donating your boat to the Coast Guard so that your boat is available to defend the people of Missouri,” Kelly said. “Like for instance if the Kansans attack down the Osage River … we will be prepared to fight hard. … We’d have our luxury boats in place.”
Former state Rep. Ed Robb gave a nice summary of the simple reason that all taxes are not equal, and state income taxes do more harm than sales taxes:
“Capital and money, they can move very easily, and they will move to areas where they perceive a better rate of return, or less tax threats, like Tennessee,” said Robb, who is seen as an economics expert in Jefferson City.
There are legitimate questions about the sales tax strategy — in particular, the Kansas City area might see a major increase in retail business moving to Kansas. But some legislators still prefer ideology to facts, and propose ideas like this one from the article:
By raising the state’s tax rate from 6 percent to 9 percent of higher personal income brackets, Oxford thinks the state would be better able to meet the challenges of funding health care and education.
“In terms of real dollars, we’re funding programs at the same levels as five, even 10 years ago,” Oxford said. “A modest increase like this would free up $1.3 billion for state-funded programs.”
A modest increase? Taking away three percent of someone’s income is a modest increase? If Rep. Oxford’s goal is to have a flood of higher-income people leave the state and take their money with them, then she’ll succeed with that proposal. Just unbelievable. …
