We have a short-sided view of funding important functions provided by our state. It has been my lifelong experience that no one likes to pay taxes and more often than not feel that they are over-paying and that others pay too little. I have tried to listen to as many points of view as possible and propose a common sense compromise that most can live with.
It is disingenuous to hide behind an overly simplistic mantra of “no new taxes” or “never raise taxes.” As all of us know, costs go up. Critical repairs and improvements must be made to our homes and businesses. We can delay for a time, but eventually we have to address the problem.
When we endlessly delay these issues at the state level and defer critical upgrades, repairs, investment, modernizations, etc., we as legislators are not saving our constituent’s money. Rather we are just kicking the can down the road and further increasing costs. Delaying inevitable expenditures and worse yet having no long-term solutions is not in the public’s best interest.
The layers of taxation are numerous and at times confusing, complicated and even disguised. Education by our elected officials, transparency and simplification when possible would also help citizens understand their actual tax burden. I want to mention three taxes in particular: state personal income tax, the state gasoline tax and the cigarette tax.
As of tax year ending 2019, our marginal Missouri income tax rate is 5.9 percent of taxable income. Without going into too much detail, this is the best example I can show of a simplified flat tax, and by its very nature it is indexed. As an individual’s income increases, the dollar amount paid will go up exactly proportional at a rate of 5.9 percent. (Again, I am simplifying and only referring to the marginal rate, not the effective rate.) Bottom line: As you make more you will pay more, but you know that rate will be fixed, at least for now, at 5.9 percent.
In my opinion having a slightly higher marginal rate would benefit the state by providing additional general revenue to address budget shortfalls, but that is a separate discussion.
The state gas tax and cigarette tax do not function in the same manner. Currently these taxes are $.17 per gallon of gas and coincidently $.17 per pack of cigarettes.
MODOT’s funding stream is not secure at this level; the last time the gas tax was increased was 1996. Common sense will tell us that even with very low levels of inflation, $.17 in 1996 is not the same as $.17 in 2019. Add to this fact that our vastly improved fuel economy, hybrids, electric cars, etc., all reduce our consumption. I am sure 99 percent of us consider that a very positive development, but it does imply that in the long run an alternative funding mechanism needs to be introduced.
I would propose adding toll roads as the fairest means of maintaining roads and bridges, but that is not part of this discussion.
In the short run, by simply indexing the gas tax to even a 1 percent annual inflation adjustment, our current gas tax would be $.22/gallon. We must maintain our transportation infrastructure, and all citizens benefit from this type of investment and spending.
The cigarette tax in our state is just plain silly. We are way below the national average and less than half (or more) than the next lowest state. Again, I love fiscal responsibility but is there any reason our cigarette tax is $.17 per pack when Virginia, Georgia, Alabama, Arkansas and Kentucky’s are at least double our rate?
Addressing these kinds of simple minor adjustments will allow our state much-needed additional revenue to meet critical needs in healthcare, education and transportation funding.
Steve Butz (D-St. Louis) represents Missouri’s 81st District in the Missouri House of Representatives.