Rex Sinquefield is backing nine ballot initiatives that would, with variations, eliminate the state income tax in Missouri and replace it with, among other things, a markedly higher sales tax and sales taxes are more goods and services than are taxed at present.
The state auditor is charged with attaching a fiscal note to each ballot initiative, informing voters what financial impact the initiative would have if passed.
Here is one suggestion for this fiscal note:
“Caps consumption tax at 7%, which is inadequate to replace current state revenues repealed. Shifts burden of taxes through consumption tax to lower and middle income citizens. Confiscates hundreds of millions in tax credits from taxpayers without compensation. Consumption tax is expanded to housing rents, food, utilities, child care, professional services.”
This blunt language was suggested to State Auditor Tom Schweich by James Moody. Though Moody was retained by a group opposed to Sinquefield’s initiatives (named Missourians Against Higher Sales Taxes), he is hardly a wild-eyed liberal. Moody served as ccommissioner of Administration for arch-conservative John Ashcroft when he was governor of Missouri.
Schweich – a Republican who beat incumbent Democrat Susan Montee in the November 2010 general election – did not take the advice of his fellow conservative on this matter.
Instead, his fiscal note – the same for all nine petitions – said not much of anything.
“The total cost, savings and/or change in tax revenue to state and local governmental entities cannot be determined. The proposal (1) requires a range of legislative actions with unknown outcomes, and (2) will result in changes to consumer spending patterns that cannot presently be quantified,” Schweich fiscal-noted.
This was a far cry from the dire warning Moody urged Schweich to issue: “We believe that a sound analysis by your office will reach the conclusion that we have reached – that is, all of these petitions are fiscally untenable. They will either bankrupt the state, or in the alternative, bankrupt the poor and the working lower and middle income classes.”
House Minority Leader Mike Talboy (D-Kansas City) released an open letter accusing Schweich of either inexperience or fear of “political retribution from mega tax supporters.”
Sinquefield, who is pushing these tax initiatives, donated $5,000 to Schweich’s 2010 campaign and has donated millions to various political campaigns in the state.
“This proposal would either require the state to impose an unrealistically high sales tax to make up for the lost income tax revenue or face the alternative of plunging the state to the brink of bankruptcy,” Talboy said, repeating Moody’s conclusion.
Schweich disregarded Talboy’s letter as “a politically motivated publicity stunt.”
Moody’s analysis claimed that Sinquefield’s proposal stating the sales tax limit would be capped at 7 percent is untenable. Moody estimated that the tax rate would need to be hiked to 15 percent to compensate for lost revenue from income tax.
The auditor’s fiscal note is subject to review by the attorney general.
A similar attempt to eliminate the state income tax is before the state Legislature buts its passage this session is not considered likely.