Taking a Stab at “Tax Stacking”

A Farmington  lawyer, Tom Burcham, is suing southern Missouri towns that “tax stack” — a practice by which municipalities circumvent the state-mandated limit of an additional 1.5 percent in sales taxes by adding additional increases through referendum.

In the suits, Burcham and his clients seek damages and attorney fees, as well as for “illegal taxes” to be returned to the residents. He has won suits in Purdy and Iberia already, and has cases pending in six other cities.

While I admire the quest to lower taxes, I am unsure whether I agree with this particular method.

First, any money that Burcham wins in damages — which amounted to $20,000 plus attorney fees from Iberia, population 620 — comes from the town’s coffers. (He did donate to charity the money he has received so far, so one can’t accuse him of a get-rich-quick scheme, but, still, high damage awards aren’t easily accommodated by small town budgets.)

Although it would be a nice gesture, agitating for the return of the disputed tax collections to citizens is infeasible — according to a Missouri Municipal League lobbyist, at least, who estimated such rulings would bankrupt the towns. Burcham has not yet convinced a town to refund the taxpayers directly, but he is still trying.

Another factor is that these projects were voted on in referendum by the public, and mainly fund projects like improved roads and fire stations. If a particular town decides to increase sales taxes to pay for a public works project, should the state be able to cap that rate? This becomes more complicated when one considers that the towns in question were following a 1999 Department of Revenue interpretation of the existing statutes — an interpretation with which Burcham disagrees.

Is this a laudable crusade for lower taxes, or a strategy that ultimately harms the very people it intends to help? Any thoughts?