Missourians Fail to Approve Tax Increases

The Associated Press wrote a story regarding the failure of tax increases to be approved over the last couple of decades.  You can read a version of the story here. As the next legislative session prepares to start, you will be hearing a lot from those who don’t think the state spends enough on _________ (fill in the blank) and that the state should expand Medicaid because it’s “free”.  Neither assertion is true.

The last failed attempt at a tobacco tax increase prior to Proposition B was a proposed constitutional amendment guaranteeing the money would be spent where the measure said it would be spent. Voters rightfully rejected that as well indicating that it’s not just where the money will be spent but how it is being spent that is a problem.

Despite claims to the contrary, it’s not that Missourians especially certain Missourians aren’t taxed enough already.  It’s that they rightfully doubt that the hard earned money being confiscated from them is being spent correctly. Evidence exists to support their doubts.

Temporary Assistance for Needy Families (TANF) and food stamp dollars are being spent all over the country and other parts of the world at casinos in the US and the Caribbean, Disney World etc.  Who can really say that taxpayers are not well founded in their disgust and disdain for paying more taxes?

A wholesale restructuring of the tax code is in order but not the way the big government spenders like Missouri Budget Project wants to see which are in reality tax increases.   Tax increases only temporarily increase revenues until people either find out how to work around them or avoid them primarily by relocating their business. California is experiencing this now and it will accelerate with the passage of several tax increases on November 6th.

Tennessee’s tax model shows it has helped it outpace Missouri’s growth for decades. Kansas has shown a very good approach to making significant tax policy changes that will generate economic activity which will increase government revenue.

The state needs to do a bottom up assessment of all programs. It’s tough to get entrenched bureaucrats to tell you what is really happening or not with programs especially if the Governor isn’t interested in doing it.  They wouldn’t prioritize the programs they are responsible for administering when I was budget chair. All programs were #1 priority.

The reluctance to do a genuine in-depth assessment isn’t a partisan issue.  Whether there is a Democrat or Republican Governor each tries to protect particular programs.  Likely different programs’ being protected but the outcome is the same, no true reform.

Where can real reform start?  Here are just a few areas we suggest to consider. They aren’t all inclusive and certainly not easy, but things of value are rarely easy to obtain or achieve.

Tax credits have become a significant source of lost revenue with very little return. The state should review and consider tax credit reform accompanied by tax reform corporate income taxes and pass through business taxes ala Kansas. Kansas decided to stop playing the “I’ll see your tax credit and raise you two more” game with Missouri and has implemented real tax reform positioning them to attract new businesses and expansion of others.

Consider eliminating useless professional licensing of professions like hair braiders, interior designers etc. that add costs, discourage competition and only benefit those already in the profession not the general public.  The General Assembly should carefully review the need for any new professional licensing activities.

No list of reforms would be complete without addressing education reform. Missouri has spent billions of dollars in increased public education funding since the 1993 no-vote tax increase and have seen nothing in return in the way of improved educational outcomes.  We are measuring the wrong things and rewarding poor performance.  In the rejecting Proposition B, taxpayers did not succumb to “it’s for the children” mantra.

Once serious reform by the state is accomplished and a true need demonstrated, Missourians may give serious consideration to tax increases.