“Governor-elect Eric Greitens has bold tax-reduction plans for Missouri but vague budget-balancing ideas. He should pay attention to the advice of Dylan Grundman, a senior analyst with the Institute on Taxation and Economic Policy in Washington.
Grundman warned the commission of ‘three paths to avoid.’ One is to cut income taxes in hopes of spurring economic growth. The Legislature did that in 2014, but the cuts haven’t yet gone into effect.
Two is shift from income taxes to sales taxes. The Legislature toyed with that idea in 2011 before dropping it when it learned how high sales taxes would have to grow. Thanks to Tuesday’s passage of Amendment 4, such a shift would now be considerably harder.
The third path to avoid is ‘racing to the bottom,’ Grundman said — trying to compete with other states for the tax-slashing mantle. Fear of Kansas, driven by conservative megadonor Rex Sinquefield, is what prompted the 2014 tax-cut bill. Kansas’ tax cuts have been a disaster.
In 2015, lawmakers recognized potential problems and created the study commission to recommend changes. The commission has held several meetings, including one last month in St. Louis. Another is Tuesday in Kansas City. Greitens might want to attend.
Grundman said Missouri’s tax system is ‘upside down,’ in that people who can least afford them are taxed the most; “out of date,” in that tax brackets haven’t been adjusted since 1931; and ‘narrow,’ because the sales tax base is eroding yet the state allows extensive income tax deductions.”