Page 932 – Show-Me Institute

We Are All In This Together, Except For Westwood

Posted on July 12, 2007May 5, 2026 by David Stokes

In today’s punch-right-between-the-eyes example of why Saint Louis County has too many municipalities, the Village of Westwood wants to contribute to the greater good by closing access to a major alternate route during I-64/40 reconstruction. Westwood, with a population of 284, and previously known mostly for its country club, and for being the home of the player who hit the most home runs in the old Busch Stadium, does not want traffic coming down Conway Road instead of I-64.

St. Louis County has said it will consider taking over Conway within Westwood if Westwood moves forward with this. That is a surprisingly easy thing for the county to do, and although Westwood has threatened to sue if that happens, I doubt that threat puts much fear into St. Louis County. Previously, St. Louis County has reached agreements with other municipalities to make the necessary road improvements during I-64 reconstruction. I particularly liked getting rid of that stupid stop sign on eastbound Clayton Road at McCutcheon. Hopefully, good sense will prevail in Westwood and they will be a better neighbor. But, if not, I hope St. Louis moves ahead with a takeover of the road for the length of the project.

The idea that a tiny village could put a log-jam like this into such an important project is just insane. Everybody is going to have to make sacrifices during this project, and everybody includes Westwood.

Taxing Pensions is Double Taxation

Posted on July 12, 2007May 5, 2026 by Maurice Harris

Here at the Show-Me Institute, we do have disagreements on policy, and I have one with David Stokes. In his blog entry yesterday about taxing pensions, he says that in many cases, since employers put money into people’s 401(k) plans or Roth IRAs, money paid out of pension funds should be taxed — because that income wasn’t taxed in the first place.

Well, in those cases I’ll agree with him that it might be fair that those funds are taxed, since they were not taxed in the first place as real income.

Yet I don’t agree with this reasoning for all plans. My father doesn’t have an IRA or a 401(k) plan; he is on a defined benefit plan sponsored by the union he is in. This plan was funded by his post-tax wages, so everything in the fund has already been subject to an income tax. This pretty much means that when he receives his defined amount every month, if it’s taxed, it reduces the funds he has to live on. This deduction rises well over $100 a month.

In other words, he is being double-taxed on the money he put into his pension. It was taxed as income when he contributed, and it’s taxed as income now that he’s drawing on the funds. The real amount he could be living on each month as a retiree is reduced, because the federal and state taxes he pays on his pension check, in effect, reduce the standard of living that he worked for, for his retirement.

So I will temper my strong statement earlier, but I still believe that most retirement funds, especially pensions, shouldn’t be taxed.

I also agree with David on this: There needs to be serious reform on tax policy in Missouri and the United States. We can give tax credits to only so many people before we have to raise tax rates on others to make up the shortfall. Hopefully, one day when I retire, I will not be taxed for saving for my future.

Check Out How Missouri Spends

Posted on July 12, 2007May 5, 2026 by Maurice Harris

You can finally know how the state spends your money! Yesterday, Missouri launched the Missouri Accountability Portal, where any person can see what the state purchases, from contracts to daily purchases made by state workers. According to the AP (via Springfield News-Leader), the governor says the website is one-of-a kind — updating the numbers daily to show how spending progresses. The new website is also receiving rave reviews from Grover Norquist, of Americans for Tax Reform:

What Missouri has done is the most extensive, and it got there first.

This is a great benefit not only for organizations like the Show-Me Institute, which wants to make sure state government is responsibly spending tax dollars, but also for average citizens who want to make sure their money is spent well. Gov. Blunt has offered a good service for the people of Missouri to make sure government is accountable and transparent.

Shame on You, McCaskill

Posted on July 11, 2007May 5, 2026 by Maurice Harris

Thanks to some digging by David Stokes here in the office, we’ve found a blog entry at The Riverfront Times that discusses Sen. McCaskill’s tendency to partake of the proverbial appropriations trough:

The results paint Missouri’s senators as decidedly un-kosher. Ranked on a
scale of 0 to 100:

Kit Bond (R): 8.33 (tied for
second-worst overall)
Claire McCaskill (D): 16.6 (tied for third-worst)

Apparently I was mistaken when I congratulated Sen. McCaskill on fighting pork-barrel spending. Sure, it’s fine to propose earmark reforms, but when you don’t live up to those principles on other spending bills, it calls into question your sincerity on the entire issue. So the question is for the Senator: Will you truly fight pork barrel spending?

P.S.: Sen. Bond, how about cutting back on some pork yourself?

I’ll Say It: Pensions Should be Taxed

Posted on July 11, 2007May 5, 2026 by David Stokes

I disagree with our uber-blogging intern Maurice Harris’s statement that the State of Missouri should go further to reducing the tax liability of senior citizens and eliminate the income taxes on pensions. Maurice writes:

A good next step would be to save other citizens’ retirement funds from taxation as well — for instance, the state taxes my father’s pension check every month.

Why should retirees get to benefit from untaxed income as opposed to the rest of us? Maurice’s father likely has a defined benefit plan, the type being replaced just about everywhere by defined contribution plans — 401(k)s, etc. The defined benefit plans that were so common until recently are a type of benefit not previously taxed as wages, unlike Social Security, where the amount deducted for SSI is included in determining how much income tax should be withheld from your paycheck every other week.

In all other types of common retirement savings, IRAs, Roth IRAs, 401(k)s, the money is taxed as income at some point, either before it is put away (Roths) or after it is withdrawn when you are retired (IRAs and 401(k)s). The amount the company put away years ago to fund a current retiree’s pension was never taxed as individual income for that employee. So it is more than fair that it be taxed as income now, when that person is likely in a lower tax bracket than they were when they worked. In the interest of full disclosure, I will have a pension when I turn 65 from six years of work for St. Louis County government. I fully expect that money will be taxed as income, as it should be.

Eliminating the tax on pensions would, like eliminating it on Social Security, increase the pressure to keep income taxes higher on everyone else. That does not mean I oppose the SSI tax reduction — I support it — but all income should be taxed by the federal and state governments once, at as low and hopefully one-day flat a rate as possible. Now, if we want to eliminate the income tax on pensions by the state of Missouri, we could do it as part of getting rid of the state income tax entirely for all of us. That I would support!

I Rise in Defense of the Congressman …

Posted on July 11, 2007May 5, 2026 by David Stokes

Channel Five did an investigative report last night on the assessed valuation of Congressman Todd Akin’s property in West St. Louis County. According to the St. Louis County assessor’s office, the congressman’s five acres are categorized as three acres of residential property and two acres of agricultural. This is important, because the taxes on agricultural property are dramatically lower then residential or commercial.

Overall, the report was pretty fair. It made it clear that:

According to state law, it’s not the Akins’ job to inform the county. It’s the appraiser’s job to inspect the area physically.

No property owner in Missouri is responsible for informing the assessor if they believe their property is assessed to low. And with the high (and probably accurate) assessments on the three acres of residential property Akin owns, I am sure the congressman has long felt he paid his fair share of taxes. I just checked what they are paying each year in property taxes, and it is indeed very high, even with the benefits of two acres being agricultural. I am not going to post their personal tax info here, public info though it may be, but it is easy enough for anyone to do at the St. Louis County website if you don’t believe me.

This may be an interesting story, but the congressman has done absolutely nothing wrong. It may have been a scandal if the congressman or his family had appealed the valuation to get the designation changed to agricultural and claimed non-existing agricultural uses, but by all accounts that never happened. You might be surprised to know that there is no hard and fast rule as to what constitutes agricultural versus residential property on larger estates of more than one acre. The first acre, where the home is, will always be residential, but beyond that it is really up to the assessors.

This is not the first time I have heard complaints from people who live on smaller lots next to multi-acre estates about the agricultural designation and resulting tax benefits. I can’t recall the address, but when I worked for Kurt Odenwald on the County Council I remember getting calls about some 40-acre plot in far west county that had about 39 acres agricultural and 1 acre residential, with a very modest house. The neighbors, in their new McMansions on one-acre lots, were paying more in taxes for one acre than this person was for 40. There was nothing the assessor’s office could do about it, as the owner of the 40 acres kept a few horses on the land; agricultural seemed to be the correct designation.

Far from benefiting from his power as a congressman, Akin will almost certainly suffer for it as, because of his position, he may have to bow to public pressure and allow the assessor’s office to change the designation next year to residential without a fight. He would be well within his rights to fight to keep the agricultual designation, and something as simple as letting a pony roam the two acres, or planting a few tomato plants on them, would likely guarantee his success in that dispute. The St. Louis County assessor has over 300,000 properties it must assess every two years. There are going to be mistakes, oversights and confusion with so many lots. This one falls into the last category, sort of on the line between the two property classifications. However, just because the ball fell onto the right side of the line for Akin does not mean he did anything at all wrong or should be forced to give up his appeal rights because of media or political pressure.

Surpluses + Legislature = A Bad Mix

Posted on July 11, 2007May 5, 2026 by Maurice Harris

According to Gov. Blunt’s budget office, the state of Missouri now has an extra $320 million in the state treasury, the Jefferson City News-Tribune stated today. This can be attributed to extra tax revenue that was added to the $200 million already saved from the last fiscal year. Some members of the Legislature are already planning to spend it:

Some of that extra money also
could be spent on Missouri’s revamped Medicaid program, which has been
renamed MO HealthNet. The bill Blunt signed into law authorizes dental
and optical coverage for adult Medicaid recipients and creates a new
women’s health initiative, but the budget lawmakers passed included no
money for those services.

Before our legislators spend the surplus that a strong economy gave them, they should consider a couple of other options. One: Put it into a rainy day fund, where the money will be available for any emergency. Two: Give it to the taxpayers, who would use the money in a more responsible way than the Legislature would. Sure, it’s fun to spend money — you know, like buying season three of "Arrested Development" or a new car — but when it’s not your money to begin with, and taxpayers expect you to spend it wisely, then it’s wise to show some restraint.

Justice for Seniors

Posted on July 11, 2007May 5, 2026 by Maurice Harris

In a Daily Dunklin Democrat article (via Combest), seniors cheer the Senior Tax Justice Act, recently signed into law by Gov. Matt Blunt. This legislation removes Missouri from the list of states that taxed non-private retirement benefits. A senior named Betty Bradley comments:

"The state taxes were just eating us alive," she said. "We are really
thankful for what the state has done regarding this matter."

This act will help to keep people in Missouri, now that their retirement funds are exempt from taxation. It’s a great first step to protect workers’ retirement funds from being raided for government coffers. A good next step would be to save other citizens’ retirement funds from taxation as well — for instance, the state taxes my father’s pension check every month.

Hopefully, this is the first step of many in protecting older Missourians from the grabbing hands of government.

Waiting for Their Handout

Posted on July 11, 2007May 5, 2026 by Maurice Harris

David Nicklaus reports in the St. Louis Post Dispatch the angst that some companies have about setting up shop in Missouri after Matt Blunt vetoed HB 327:

A lot of jobs are at stake — (Steve) Johnson says a couple of prospects are in
the 1,000-employee range — and Missouri isn’t exactly putting its best
foot forward. "If they called and said we have to make the final choice
tomorrow, then we’re in trouble," Johnson said. "They will not decide
on something based on uncertainty."

Businesses like Advantage Capital are now said to be looking in other places, like Mississippi, because Missouri does not have any incentives in place to match federal tax credits and other credits for businesses to move here. Now, of course, I do not like to see jobs redirected elsewhere, but rather than reauthorizing tax credits every two years there should be a push for broad-based reform that will attract all kinds of businesses. Maybe that should be the major discussion in the next session, rather than picking tax credit recipients.

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