August 26, 2013

The Joplin Globe: Sloppy attempt would lead Missourians into dark hole

media mention

(Original Post)

August 26, 2013
By Elliott Denniston
Special to The Globe
WEBB CITY, Mo. — Republican legislators and a handful of self-interested groups are campaigning to override Gov. Jay Nixon’s veto of House Bill 253, a slipshod attempt to revise our income tax code.
The bill drastically shifts the burden from high earners to the middle class and poor by reducing personal and corporate income taxes and claims to replace the lost revenue with increased sales and property and use taxes which include Internet sales taxes.
Millions of dollars are being poured into a campaign to override this veto, dollars coming from wealthy corporate interests with lots to gain.
Residents of Southwest Missouri must resist the propaganda and act quickly to tell our representatives that the governor’s veto must stand.
Income tax reductions may sound like a good idea until you delve into the details.
House Bill 253 is a clumsy patchwork of changes that will benefit the wealthiest while placing more burdens on those having trouble surviving in today’s economy.
The Coalition for Missouri’s Future calculates income tax savings of $6-$15 for families of three or four persons earning up to $60,000.
That will not increase the buying power of middle-income families, and that, after all, is the key to our economic recovery.
Meanwhile, costs for services such as education, subsidized medical care, and child care would increase, and sales and property taxes would rise.
Nor would the tax cuts bring sufficient savings to small businesses to stimulate job creation, the mythical promise behind Republican schemes like this one.
The Coalition also found that a family with a net business income of $500,000 would save $2,400.
Is a small business with a taxable income of half a million dollars actually going to hire a new employee if we give them an additional $2,400 tax break?
The Republican litany, “Reward job creators with tax cuts so they will create more jobs,” is not supported by facts.
A study by The Institute on Taxation and Economic Policy showed that between 2002 and 2011 economic growth was not linked to whether states had income taxes or at what levels (U.S News & World Report, June 13, 2013).
The Governor’s Budget Office has estimated that House Bill 253 could cost Missouri $700 million to $800 million annually.
For comparison, we spend $772 million on all of our higher education institutions, $665 million on Corrections and Public Safety, and $601 million on the Department of Mental Health.
These proposed tax cuts come when services are already critically underfunded.
For example, the K-12 education formula is underfunded by $600 million, and higher education funding is $100 million below 2001 funding levels.
Missouri is already 43rd in the nation in funding K-12 and 47th in funding colleges and universities. Do we really want to dig Missouri further into a dark hole?
In addition, seniors would be dramatically hurt by the override. When property taxes rise, home ownership becomes unaffordable, and landlords are forced to raise rents. Community services could be reduced or eliminated. Also, there is uncertainty over whether the bill imposes a new tax on prescription drugs. If it does, seniors could face a cruel new expense.
Preparing for the possibility of an override, Gov. Nixon has already withheld $400 million from the 2014 budget, with cuts being made to schools, higher education, doctor reimbursements for Medicaid services and state employee costs. If the veto is overridden, these cuts will have an immediate impact on availability and costs of services. And the long-term picture is even worse.
When fully enacted, the bill could mean cuts of about $2 million a year for both the Joplin School District and Missouri Southern State University. Crowder College could lose up to $600,000. Cuts like these will weaken public schools and mean higher tuitions, fees and activity costs, or unsavory cuts in services.
Even more dangerous is the potential for an immediate $1.2 billion hit to state coffers because House Bill 253 opens the door for wealthy taxpayers to demand up to three years’ retroactive tax refunds.
Meager state surpluses will be wiped out, and our debt and credit ratings will be affected.
Again, this will not reward most hardworking middle-class earners, just those who really do not need the refunds.
House Bill 253 is riddled with other defects, loopholes and misguided ideas about how to help Missouri thrive. The results of the Kansas Legislature’s mistakes over the past few years have been disastrous.
Kansas has not been able to add jobs or new industries as promised when its tax cuts were enacted. Moody’s has downgraded the state’s bond rating because of projections for worrisome revenue decreases in coming years. The Tax Foundation and the Center on Budget and Policy Priorities, groups that usually disagree, have stated that the Kansas experiment with tax reductions is “the worst in the nation.”
We cannot let Republicans march us deliberately into the same dark hole. Missouri’s override session begins Sept. 11.
Tax code revisions may be needed, but the path charted by House Bill 253 leads us into a dark hole of fewer resources and more costly services.
An override of the bill would seriously endanger Missouri’s future. Contact your legislators now.
Elliott Denniston lives in rural Webb City.

August 26, 2013

By Elliott Denniston

Special to The Globe

WEBB CITY, Mo. — Republican legislators and a handful of self-interested groups are campaigning to override Gov. Jay Nixon’s veto of House Bill 253, a slipshod attempt to revise our income tax code.

The bill drastically shifts the burden from high earners to the middle class and poor by reducing personal and corporate income taxes and claims to replace the lost revenue with increased sales and property and use taxes which include Internet sales taxes.

Millions of dollars are being poured into a campaign to override this veto, dollars coming from wealthy corporate interests with lots to gain.

Residents of Southwest Missouri must resist the propaganda and act quickly to tell our representatives that the governor’s veto must stand.

Income tax reductions may sound like a good idea until you delve into the details.

House Bill 253 is a clumsy patchwork of changes that will benefit the wealthiest while placing more burdens on those having trouble surviving in today’s economy.

The Coalition for Missouri’s Future calculates income tax savings of $6-$15 for families of three or four persons earning up to $60,000.

That will not increase the buying power of middle-income families, and that, after all, is the key to our economic recovery.

Meanwhile, costs for services such as education, subsidized medical care, and child care would increase, and sales and property taxes would rise.

Nor would the tax cuts bring sufficient savings to small businesses to stimulate job creation, the mythical promise behind Republican schemes like this one.

The Coalition also found that a family with a net business income of $500,000 would save $2,400.

Is a small business with a taxable income of half a million dollars actually going to hire a new employee if we give them an additional $2,400 tax break?

The Republican litany, “Reward job creators with tax cuts so they will create more jobs,” is not supported by facts.

A study by The Institute on Taxation and Economic Policy showed that between 2002 and 2011 economic growth was not linked to whether states had income taxes or at what levels (U.S News & World Report, June 13, 2013).

The Governor’s Budget Office has estimated that House Bill 253 could cost Missouri $700 million to $800 million annually.

For comparison, we spend $772 million on all of our higher education institutions, $665 million on Corrections and Public Safety, and $601 million on the Department of Mental Health.

These proposed tax cuts come when services are already critically underfunded.

For example, the K-12 education formula is underfunded by $600 million, and higher education funding is $100 million below 2001 funding levels.

Missouri is already 43rd in the nation in funding K-12 and 47th in funding colleges and universities. Do we really want to dig Missouri further into a dark hole?

In addition, seniors would be dramatically hurt by the override. When property taxes rise, home ownership becomes unaffordable, and landlords are forced to raise rents. Community services could be reduced or eliminated. Also, there is uncertainty over whether the bill imposes a new tax on prescription drugs. If it does, seniors could face a cruel new expense.

Preparing for the possibility of an override, Gov. Nixon has already withheld $400 million from the 2014 budget, with cuts being made to schools, higher education, doctor reimbursements for Medicaid services and state employee costs. If the veto is overridden, these cuts will have an immediate impact on availability and costs of services. And the long-term picture is even worse.

When fully enacted, the bill could mean cuts of about $2 million a year for both the Joplin School District and Missouri Southern State University. Crowder College could lose up to $600,000. Cuts like these will weaken public schools and mean higher tuitions, fees and activity costs, or unsavory cuts in services.

Even more dangerous is the potential for an immediate $1.2 billion hit to state coffers because House Bill 253 opens the door for wealthy taxpayers to demand up to three years’ retroactive tax refunds.

Meager state surpluses will be wiped out, and our debt and credit ratings will be affected.

Again, this will not reward most hardworking middle-class earners, just those who really do not need the refunds.

House Bill 253 is riddled with other defects, loopholes and misguided ideas about how to help Missouri thrive. The results of the Kansas Legislature’s mistakes over the past few years have been disastrous.

Kansas has not been able to add jobs or new industries as promised when its tax cuts were enacted. Moody’s has downgraded the state’s bond rating because of projections for worrisome revenue decreases in coming years. The Tax Foundation and the Center on Budget and Policy Priorities, groups that usually disagree, have stated that the Kansas experiment with tax reductions is “the worst in the nation.”

We cannot let Republicans march us deliberately into the same dark hole. Missouri’s override session begins Sept. 11.

Tax code revisions may be needed, but the path charted by House Bill 253 leads us into a dark hole of fewer resources and more costly services.

An override of the bill would seriously endanger Missouri’s future. Contact your legislators now.

Elliott Denniston lives in rural Webb City.

 

 

 


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