To Tax Or Not To Tax

As the do-or-die deadline for the so-called supercommittee approaches, it is clear, as it has been for some time now, that the fight is over whether Congress will be responsible and raise revenues in some fashion, or whether Tea Party know-nothings, content with watching the country slowly devolve, will have their way.

Monday’s Joplin Globe featured on its opinion page three separate articles on taxes. Dale McFeatters began his column with this:

Slowly, very slowly, congressional Republicans are getting over their total aversion to tax increases, a vital component of any deficit-reduction plan that will really work.

It is true that Republicans on the supercommittee have offered what they estimate to be $300 billion in increased revenues over ten years. They would eliminate various deductions and tax breaks in the code in exchange for permanent cuts in marginal rates, the top rate dropping to 28 percent. 

While that offer isn’t sufficient—it relies too much on cutting spending to achieve the committee’s mandate to trim $1.5 trillion over a decade—it is, as Senate Budget Committee Chairman and Democrat Kent Conrad said, “a step in the right direction for them to just rhetorically cross that line.”

Here in Missouri, we have our own problem with taxes. Monday’s Globe paid a mixed tribute to the late Mel Hancock, the prototype of today’s tax-cutting, budget slicing teapartier. Phill Brooks, director of the Missouri School of Journalism’s State Government Reporting Program, discussed Hancock’s legacy vis-à-vis Missouri’s finances:

Hancock led the successful 1980 petition campaign to impose a revenue limit on state government.

…in political reaction to the anti-tax sentiment Hancock’s petition campaign had demonstrated, the state’s governor and Legislature passed a sweeping package of tax cuts that constrain the state’s budget to this day…

Missouri now suffers from a bust cycle for tax collections. Taxes are growing at a far lower rate than the growth of the demands for state spending.

Brooks referenced Jim Moody, who worked for former Republican governor John Ashcroft as Missouri’s Commissioner of Administration:

In what became known in the Statehouse as the Moody Report, he warned that those post-Hancock tax cuts had ended Missouri’s ability to finance, on a long-term basis, “the basic functions of government” that are defined by law.

And that’s where we are today: unable to finance the basic functions of government.  Brooks mentioned, for instance, how the state is unable to adequately fund our public schools:

…in the past few years the shortfall in state revenues has prevented the Legislature from providing local public schools with the minimum amount of state funds required by state law. Effectively, the state’s system for funding local schools is illegal because of the disconnect between state spending demands and the state’s tax base.

Sad it is that our state representatives—almost all Republicans—refuse to even consider tax increases to help keep Missouri in compliance with its own laws. And sad it is that national Republicans are willing to watch the country deteriorate in the name of low taxes.

That’s fanaticism any way you look at it.

Finally, and speaking of fanaticism, Monday’s Globe also included an editorial, written by the Kansas City Star, that opposed St. Louis zillionaire Rex Sinquefield’s attempt to place on the Missouri ballot a constitutional amendment to eliminate the state’s personal income taxes and replace them with an “everything tax,” which amounts to a 10 percent state and local sales tax. 

Guess who gets the shaft from that gold mine of conservative economics? Yep:

Replacing the state income tax with an expanded sales tax would be great for people with very high incomes. They would gain more in tax savings than the extra amount they would have to spend on food, clothing, vehicles and almost everything else.

Included among those beneficiaries would be Rex Sinquefield, the St. Louis multimillionaire who is bankrolling an initiative petition drive to phase out Missouri’s income tax.

But Sinquefield’s gain would come at the expense of middle- and low-income households, which would not recoup enough in income tax savings to make up for the cost of a higher sales tax on a greater variety of goods and services. Many seniors would receive no income tax break but would pay much more for daily living purchases.

The justification, of course, for this dishonest proposal is that it would create more Missouri jobs and make us more productive and more attractive to businesses. But consider this graph, which was produced by Missouri state auditor and Republican Tom Schweich (click for better view):

As you can see, Missouri has a rather low tax burden and a rather high need for additional revenue. Consider the taxes on cigarettes:

Yikes. We’re dead last when it comes to taxing smokers, many of whom tax the health care system.

It must be noted here that none other than the United States Chamber of Commerce ranks Missouri seventh of the fifty states in its low-tax and regulation category.  A question arises: If low taxes and lax regulation are so damn good for business, where are the jobs? Our unemployment rate is 8.5%.

What all this tax stuff comes down to, ultimately, is whether Americans—no, really it is Americans who vote—will reject the legions of anti-tax politicians who promise that lowering taxes on the wealthiest Americans will solve our economic woes.


Mel Hancock, R.I.P.

Before anyone ever heard of the Tea Party, there was Mel Hancock, who died on Sunday.

Born in 1929 at Cape Fair, Missouri, on the shores of Table Rock Lake, Mr. Hancock made his mark on Missouri politics by his famous, or infamous, amendment to the Missouri constitution that restricted the state’s ability to raise revenues and forced local governments to get approval from voters before raising taxes. The anti-tax effort began with his founding of The Taxpayer Survival Association in 1977.

Wikipedia’s entry credits the Hancock Amendment, approved by voters in 1980 with 55% of the vote, as,

one of the first state tax limitation amendments in the United States.

Hancock was elected to serve as Missouri’s 7th congressional district representative (now served by Ozark Billy Long, whom Hancock endorsed) in 1988 and served four terms, executing a “self-imposed” limit, as the Joplin Globe described it, having promised voters he would not seek more than four terms.

While he served as our U.S. congressman, he was known as a conservative’s conservative. During that time, Hancock attempted to right a wrong he thought state lawmakers committed, according to the Globe:

Frustrated that the state Legislature approved a large tax increase to benefit education in 1993, Hancock backed another ballot initiative in 1994 that would have further tightened the revenue restrictions of his original constitutional amendment. Voters soundly defeated it after Democratic Gov. Mel Carnahan warned it could have forced painful cuts to state services.

Indeed, Hancock II, as it was dubbed, could have been even more painful than was Hancock I.  The proto-Tea Party congressman was upset that Carnahan managed to get through the legislature a $310 million tax increase for Missouri education and he was determined to see to it that lawmakers could not again thwart his anti-tax amendment.

Fortunately, as the Globe noted, Missouri voters could see just how reckless was Hancock’s new amendment.  But Carnahan proposed his own tax-restricting amendment, which did pass in 1996, and Mel Hancock’s anti-tax, tiny-government spirit lives on today in the Missouri legislature, which is dominated by Hancock-like lawmakers.

The St. Louis Beacon earlier this year reported that Jeanette Mott Oxford (D-St. Louis) is not one of those Hancockian legislators:

Noting that the state is about $4 billion below the original Hancock lid, she says the state has plenty of room to increase revenue. To refuse to do so, she says, means “condemning ourselves to mediocrity.”

“We are not apt to rebound to where we were in 2008 for another five years,” Oxford said. “We have to make adequate investment in things from public education to how we care for senior citizens if we want to have excellence in this state.” 

She argues that it is stellar services, not low taxes, that will help bring Missouri out of the recession.

“The promise has been, if we get taxes low enough, we’ll have nirvana in Missouri. We’ll have all these jobs and everything will be humming along. But why do we have 10 percent unemployment? If this is the key to success, why hasn’t it worked yet?

“I just think that’s not right. I think creating businesses is about excellence — excellence in education, excellence in the amenities we can offer. But that requires investment, and we’re not willing to make that investment.”

Tom Kruckemeyer, of the Missouri Budget Project, said,

If I was king of the world, I’d note that the state hasn’t raised its basic income tax brackets in 40 years, so that is overdue. Pie in the sky, the state would be well served by reworking the income tax to make it more progressive. But obviously, the current political climate is firmly in the anti-tax camp. There doesn’t seem to be much interest in what I would regard as fairly innocuous increases, like tobacco or alcohol taxes.

That anti-tax political climate and the associated state mediocrity that goes with it is the legacy of Mel Hancock in Missouri. As the St. Louis Beacon pointed out:

The relationship between low taxes and poor national rankings has been the subject of debate for decades, as the state consistently is rated in the lower 20 percent of the nation in any number of measures.

But since he was proud of his achievement, perhaps it is best to let Hancock have the last, if discouraging, word:

What’s wrong with being one of the lowest tax states in the union? I don’t think that’s insulting. I think that’s an indication that we’ve got some smart people in Missouri.

The measure of whether government is doing its job is whether it is providing necessary services that people can’t provide for themselves, and doing it for the least cost. I haven’t heard anybody complaining about being low-taxed except for a few people who are living on tax dollars and depend on tax dollars for their own personal welfare. They don’t want any restrictions.

A conservative’s conservative.

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