St. Louis Post-Dispatch: Missouri Senate declares class war against citizens
media mentionBy the Editorial Board
Midway through the first session of the 97th Missouri General Assembly, the state Senate — in the name of tax “reform” — has declared class war on at least 80 percent of the state’s 6 million citizens.
The Senate has done this by proposing a massive shift in the state’s tax burden. The poor, the working poor and the middle class would pay more. Senior citizens would pay significantly more. The upper middle class — the 15 percent of Missouri families who get by on an average of $111,000 a year — would save a little bit: 23 bucks a year. They’d lose far more than that in good schools, access to higher education and the other qualities that make for a decent state.
In all, the Senate, Democrats and Republicans alike, have declared war on everyone but the upper class and the concrete lobby, those whose business it is to build roads and bridges.
Among other changes to the tax code, the Senate has proposed reducing Missouri’s already inadequate corporate and individual income tax rates and replacing part of the lost revenue with a half-cent sales tax. Twenty-three of the Senate’s 24 Republicans voted for it. One GOP senator, David Pearce of Warrensburg, voted with the 10 Senate Democrats against it.
Separately, 24 senators — 14 Republicans and 10 Democrats — voted to ask voters to add another one-cent sales tax to raise $8 billion over 10 years for highways. Ten Republicans voted against this measure.
Good roads are important. Building them will create jobs. These are good things. Whether a sales tax is a good way to pay for them is less certain.
Most of the Senate’s other tax proposals are driven by a theological belief that shifting the tax burden from income to consumption, and paying welfare to corporations, will cause the state’s economy to blossom. Inasmuch as Missouri already has a business-friendly tax climate, this is a dubious proposition. “Come to Missouri, where the taxes are low, the roads are good and the schools and state services are crummy” is not much of an economic development slogan.
Data always trump belief. The Missouri Budget Project and the Institute on Taxation and Economic Policy have analyzed the impact of the Senate’s two biggest proposed changes — cutting income taxes and adding 1.5 cents in sales taxes. Both are progressive think-tanks, but the numbers they crunch are neutral.
The poorest 20 percent of Missourians, those earning $18,000 a year or less, will pay $63 a year more in taxes.
Those earning between $18,000 and $33,000 a year will pay $129 more.
The middle quintile — those earning between $33,000 and $53,000 a year — will pay $150 a year more.
The fourth quintile ($53,000 to $85,000 a year) will pay $149 a year more.
That’s a grand total of 80 percent of Missourians who will pay more and get less: crummier schools, higher college tuitions (because state aid will continue to fall) and less access to worse state services. The poor are used to this. It remains to be seen whether the middle class will put up with it.
The only people who would come out ahead are those in the top 20 percent of taxpayers. And three-fourths of those — families with incomes of between $85,000 and $160,000 a year — are going to save an average of two bucks a month on their state taxes.
The next 4 percent — those in the 95th to 99th percentile, with incomes up to $394,000 — will save an average of only $770 a year.
It will come as no surprise that the big winners will be the top 1 percent, those earning more than $394,000 a year, families or individuals with an average income of $1,038,000 a year. They’ll save an average of $7,369 a year.
Even if you strip the proposed 1-cent highway sales tax out of the equation, the savings are minimal until you get to the 95th percent of income-earners. In fact, the highway sales tax will knock $900 a year off their average tax savings. The Senate will probably give them an exemption.
Except for the poor and working poor (who are used to being hosed down by the Legislature), the biggest potential losers in the Senate’s proposals are senior citizens living on Social Security.
Missouri exempts Social Security benefits from the state income tax, so they get nothing from an income-tax cut. But their state sales taxes would go up by 1.5 cents, meaning they’d pay an average of $216 a year more. And if those senior citizens also rent their homes and if the Legislature goes along with Mr. Nixon’s proposal to eliminate the special “circuit-breaker” property tax break, they’ll face another $534 in added taxes.
There is still time to stop all of this. The Senate’s proposals first must get through the House. Mr. Nixon could veto the income tax cut and should, testing whether the GOP majorities in both Houses really are veto-proof. Any sales tax that comes out of the Legislature also must be approved by voters, too.
If this huge tax shift shows up on the ballot in November 2014, the voting booth will be where the class war ultimately is won or lost.