Last week, the St. Louis Post Dispatch reported that the Missouri Senate is studying a proposal to eliminate Missouriís personal and corporate income taxes and substitute a higher sales tax.
There are problems with this approach. First, sales taxes are regressive. Lower and middle income individuals pay a greater percentage to taxes than higher income individuals. Next, relying on sales taxes for nearly all of the stateís revenue is risky. Sales of goods and services within a state can vary widely from year to year.
Two articles in the St. Louis Business Journal present better alternatives to increasing tax revenues. In the January 4, 2008 issue, it was reported that Missouri could increase tax revenues by hundreds of millions of dollars annually by closing tax loop holes. In the December 19, 2008 issue it was stated that Missouriís tax collection is in disarray. The article pointed out that Missourians pay what they think they owe, not knowing what they really owe. The 118 different tax systems donít talk to one another. Therefore, there are inefficiencies, overlaps, and missed tax revenues. Lastly, the system for collecting tax revenues is out of date. Delinquent income and corporate tax revenues are often not collected.
Correcting these problems are better approaches to increasing the stateís revenues while reducing the inefficiencies in the stateís tax system.
(The opinions expressed are not necessarily those of St. Louis Public Radio.)
Lowe "Sandy" MacLean is vice chancellor emeritus, University of Missouri, St. Louis, and is active in local political and community organizations, including the Grand Order of Pachyderms (GOP), a service organization for the Republican Party.