Taxes and a Poor Choice of Words …
When I first read the title of the Post-Dispatch’s coverage of this sales tax issue, I was confused. “House endorses sales tax increase for veterans”? Wow … that’s pretty heartless, don’t you think? To single out veterans for a tax increase?
Sentence structure aside, this is a misleading article. The House voted to endorse a constitutional amendment today, which would increase the state sales tax by 1/8th of one percent (not 1/8th of one cent, as the Post’s article erroneously and nonsensically reports). Revenue from the tax increase would be used to fund state programs for veterans.
To be sure, this isn’t a huge tax increase a median Missouri household (with income of approximately $38,000) might expect to pay an additional $14.25 in sales taxes every year but I am always skeptical of tax increases in any form. Every tax increase means that money that could have been spent elsewhere creating jobs, paying for health care, and fueling economic growth is spent by a state bureaucrat instead.
For example, Missouri personal income was $191,602 million in 2006, according to the Economic and Policy Research Center. That number represents the aggregate income earned by all Missourians during 2006. On average, households spend about 70 percent of their income on consumption goods, of which slightly less than half are subject to sales tax. This means that an increase in the state sales tax rate of 1/8th of 1 percent would transfer nearly $72 million from taxpayers to the government every year. Think how many jobs $72 million could create. And that’s just in one year!
The Missouri House of Representative has decided that the money would be better spent by the state. Is this really helping our veterans? Our citizens?