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A summary of the 2010 Missouri General Assembly session was provided in the May 16th issue of the St. Louis Post Dispatch. Governor Nixon was quoted as stating, that he plans to cut $500 million from his proposed budget for next year and the state government would then be lean and “right sized.” This is in addition to the $700 million that was cut from the state budget last year.
What about “right sizing” state revenues as well? A review of Missouri state revenues presents a number of anomalies. Missouri has the lowest cigarette sales tax in the nation. Unlike 23 other states, Missouri does not tax internet sales. This is unfair to Missouri merchants, businesses, and industries. The state provides at least fifty different tax credits for housing developments, farms, charities, and new businesses. Surely; some of these tax credits are unproductive and out of date.
Missouri’s progressive income tax was enacted in 1931 and has not been significantly revised since. Missourians’ who earn at least $9,000 of adjusted gross income per year are taxed at the rate of 6 percent. Therefore, those making only $9,000 per year are taxed at the same level as those making $90,000 or more.
The Missouri Budget Project, a non-profit public policy analysis group, lists several other tax loopholes. These include the yacht sales tax exemption, a corporation tax exemption that allows some multi-state corporations to funnel their profits earned in Missouri to states that have no corporate income tax, and a discount to businesses that pay payroll taxes on time. No other state provides a payroll tax discount.
Governor Nixon, in cooperation with the members of the Missouri General Assembly, should establish a bi-partisan commission to study and recommend a revised Missouri tax structure. Additionally, this commission should review the state’s needs to improve its education system, social services programs, and the business climate to attract more manufacturing, businesses, tourism, and high tech jobs to Missouri.
As required by the state constitution, the additional revenues needed by the state will require a vote by Missourians. Therefore, the commission’s recommendations should be ready for a vote by Missourians in the 2012 election.
Some may say that Missourians will never vote to increase their state taxes. I don’t think this is the case. The proposed revised tax structure, if presented properly to the public, could convince Missourians that the Governor and the Missouri General Assembly have made the necessary reductions in past years, and the state needs more revenue. In recent years, Missourians have been more willing to pass local school bond issues. Proposition A, the increase in sales tax for Metro, passed easily in St. Louis County after failing on two previous occasions.
If we are right sizing government and its services we need to right-size our state revenues as well. Not to do so, puts Missouri’s essential state services, educational institutions, businesses, and industries at a disadvantage.
(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.