Republicans in the House of Representatives will vote on a bill that would abolish the Internal Revenue Service (IRS), eliminate the national income tax and replace it with a national consumption tax.

Fox News Digital has learned that the House will be voting on Georgia Republican Rep. Buddy Carter’s reintroduced Fair Tax Act that aims to reel in the IRS and remove the national income tax, as well as other taxes, and replace them with a single consumption tax.

The vote on the bill was made as part of the deal between House Speaker Kevin McCarthy, R-Calif., and members of the House Freedom Caucus and was pushed forward in his quest for the gavel last week.

Am I saying there’s a chance?! No, not really. The Senate and the president will almost certainly reject abolishing the income tax, and it’s not entirely clear that even the House has the votes to pass it through the chamber. Then there’s the sticky issue of repealing the 16th Amendment, which enabled the national income tax; if this law were to pass, you’d need to repeal the amendment so that we won’t someday end up with both a sales tax and a renewed income tax! Details, details.

But is a national move away from the income tax the right idea? Undoubtedly. Income taxes are destructive to growth at all levels of government, and as Institute analysts press for the elimination of Missouri’s income taxes, our federal counterparts should consider similar tax reductions and reform. Whether this latest effort is the best approach or even has a snowball’s chance of success remains to be seen, but I’m glad the conversation is at least being had. It’s overdue.

The post Federal Lawmakers to Consider (Longshot) Income Tax Repeal Bill appeared first on Show-Me Institute.

The post Attacks on Fair Tax Are Propaganda, Not Economic Analysis appeared first on Show-Me Institute.

Be sure to listen it to Steve’s radio show on Tuesday nights, while you are at it. Finally, if you are in Mid-Missouri, think about participating in the Show-Me Institute’s Columbia book club.

The post Article About the Missouri “Fair Tax” in the Columbia Missourian appeared first on Show-Me Institute.

I strongly recommend everyone watch the video. Speaking as someone who would normally rather take a dart to my eardrum than watch an online video of a political speech, you can trust me that this one is worth it. After you watch it, read the Post-Dispatch’s take on it and try and decide where you stand. Needless to say, I support the governor here. I think that cuts to the size and scope of government in our state, along with consolidations for greater efficiency, are long overdue, and I give great credit to any elected official of either party who is willing to make the tough choices and hard decisions, as the governor is doing here.

I have not fisked a Post editorial or column in a while — probably not since Eric Mink left. But I think that both this topic and article deserve a point-by-point analysis:

Missouri Gov. Jay Nixon, in an address to a group of business leaders in Springfield last week, called for plugging the $500 million gap in the state budget with a program to “right-size state government by cutting programs, trimming the workforce and consolidating departments while maintaining excellence in our services.”

Some of his ideas: Whacking 1,000 more employees from a state payroll that already has been trimmed by 1,800 workers; closing some county offices of the Family Support Division, making it harder for people to get to one; selling 2,000 state vehicles; outsourcing child support collection to private firms; combining the Highway Patrol and the Water Patrol; eliminating the May 8 Truman’s Birthday state holiday; streamlining the environmental permit process and “modernizing” (i.e., reducing) pension and health care insurance for state employees.

So far, all of this sounds perfectly reasonable and positive to me.

“My blueprint for change will recalibrate the size and scope of state government, giving us a government that is leaner, nimbler and less costly,” Mr. Nixon said.

Also, he said this: “One thing is off the table here in the Show-Me State. We will hold the line on taxes.”

Excellent.

In all, this is the kind of plan you’d expect from a Republican governor.

But Mr. Nixon is not a Republican. He calls himself a “fiscally conservative Democrat.” This is nothing if not politically expedient, a quality that has marked Mr. Nixon’s entire career.

I will avoid the political aspects of the article, because commenting on that is not part of my role here at the Show-Me Institute.

Given the Republican majorities in the Legislature and the reflexive anti-tax sentiment in Missouri’s suburbs and rural areas, and given where most campaign cash comes from, it would take a far bolder leader than Jeremiah W. Nixon to tell Missourians the reality.

Although I’m avoiding the politics, I should point out that some of the personal attacks detract from the seriousness of this article.

The simple truth is you can’t cut $1.2 billion from the state budget in two years, as Mr. Nixon has had to do during the economic downturn, and still emerge with a budget that meets the state’s crushing needs.

Whose “Truth”? Who defines “crushing?”

Here’s another truth: Those “excellent services” that Mr. Nixon talks about don’t exist. In rankings among the 50 states for various state services, Missouri generally ranks in the mid-30s to the mid-40s. In public health spending, Missouri is 50th. In Education Week’s recent survey of overall performance on school achievement, the state ranked 40th.

Unbelievable. The Post claims that services are of a low quality, and uses public health spending levels as evidence. It is possible, however, to have low spending levels and still have quality services. At least the other examples cited performance measures (biased as they may be), rather than spending levels.

In his speech, Mr. Nixon touted a report by Moody’s Investment Services that ranked Missouri, largely because of its Triple A bond rating, as one of the states poised to lead the nation in economic recovery. But Mr. Nixon won’t take the lead on a proposed capital bond program that would put Missourians to work.

I am not adamantly opposed to the bond program proposal, but the Post blindly assumes that the short-term economic benefits will outweigh the added debt payoff in Missouri’s long run. It may, but the governor hardly deserves criticism here.

A similar survey done by online newspaper The Daily Beast — and not in thrall to bond ratings — showed Missouri ahead of only Michigan in its economic prospects in the next eight years.

“Take him to Detroit!”

Missouri is a low-tax, low-service state, ranked 16th among the 50 states in The Tax Foundation’s business climate index. Yet that hasn’t brought businesses and jobs knocking on the door. Even before the recession, the state’s growth was flat.

Perhaps this is because all taxes are not equally distortionary, and businesses are more concerned with high state income and earnings taxes than our comparatively low property and sales taxes. We’ve released several studies dealing with these points.

Perhaps its low investment in public health and education quality has something to do with it. Perhaps its low investment in highway, bridge and other infrastructure has something do with it. Perhaps its penuriousness on safety-net services for its people has something to do with it.

I dispute the term “low.” The amount of this type of investment in Missouri may be lower than in some other states, perhaps, for some of the above examples. However, I outright dispute the infrastructure factoid above. Reason ranks Missouri 23rd in its highway system quality. And I want to live somewhere with a lower-level safety net. Expanding the welfare state is not the way to grow the economy. Does the Post really think that economic growth is aided by the expansiveness of a state’s welfare system? That is just ludicrous.

Now comes Mr. Nixon with a bugle sounding retreat.

And then there’s the so-called “Fair Tax” proposal. It was pushed in the Legislature earlier this session and now is being pushed in a petition drive. The man behind both is retired investment executive Rex Sinquefield. The “Fair Tax” would eliminate the state income tax and replace it with a “consumption tax” — a sales tax on nearly everything.

We have written about this issue enough around here.

The state sales tax, now 4.225 cents on the dollar, easily could climb to 7 or 8 percent. Depending on how successful lobbyists are at carving out exemptions, it could go as high as 12.9 percent, according to an analysis done for the Missouri Budget Project, a liberal-leaning think tank.

The Post is correct here. The latest plan has a rate of 7 percent, because a few major exemptions have been added, and that rate would indeed suffer more if lobbyists are successful in getting still more exemptions approved.

When you add local sales taxes (anything from 2.1 cents in parts of St. Louis County to almost a nickel in parts of the city of St. Louis) that would mean you’d be paying an additional 15 to 19 cents on everything you buy.

This is factually wrong. The plan includes decreasing local sales tax rates if the “Fair Tax” were adopted, in order to prevent a windfall for local governments.

Yes, that would attract jobs and businesses — to Illinois and Kansas.

It might encourage some retail businesses to move, particularly those near the Kansas border, but the exact same set of incentives would encourage other types of businesses — like, oh, say, corporate offices — to move into Missouri.

Missouri must live within its means. But the means don’t have to be quite so mean. The Missouri Budget Project suggests three simple, fair steps that Mr. Nixon and the Legislature could take to offset the need for many of the new cuts.

These ought to be good.

• Collect sales taxes from all online vendors, not just those with employees in the state. This could return $180 million a year to state and local governments.

On top of just being wrong, this would be extremely difficult to enforce, and probably impossible at this time. Please tell me: What services does an online vendor in California receive from Missouri that would justify forcing it to collect a sales tax?

• Eliminate the so-called “Geoffrey Loophole” — named after Geoffrey the Giraffe, the mascot of Toys“R”Us, one firm that exploits the loophole. It allows companies to reduce the profits shown on Missouri tax returns by transferring income from subidiaries to out-of-state corporate umbrella companies. Taxing all the profits they earn in Missouri could return $90 million a year.

Taxing all the profits might also encourage some businesses to leave Missouri entirely. Then where would we be? However, this point is not entirely off-base. Eliminating loopholes can be great, but only if the overall rates are correspondingly lowered.

• Eliminate the “Timely Finally” discount given to corporations that pay their taxes on time. Individuals who pay on time don’t get a discount. Why should corporations? Estimated new income: $39 million a year.

This refers to the credits businesses get when they submit employee income tax withholdings and sales taxes on time. If the state forces private businesses to serve as its tax collectors, it should compensate them in some manner. This is no different from paying jurors a small salary.

Long term, real leaders will have to lead a discussion about the true relationship among taxes, services, growth and prosperity. Missouri taxes individual incomes over $9,000 at the same 6 percent rate. If you make $9,000 you pay the same 6 percent as the guy who makes $9 million. Or $99 million.

Finally, something on which we can all agree. If the “Fair Tax” does not receive the support of a majority of Missourians, than we should increase the threshold at which you’re required to pay the highest tax rate of 6 percent. That would entail a tax cut for almost every Missourian, but would really benefit people with lower incomes.

In 2007, each Missourian enjoyed the benefits of $66 paid by corporations in income tax. Per-capita corporate income taxes were higher in all eight bordering states, ranging from $233 in Kentucky to $109 in Iowa. Rich people and corporations are getting a deeply discounted ride on the backs of the poor and working class.

This is absurd class warfare rhetoric. By this logic, states should all be in a race to levy the highest amount of taxes possible.

If this had yielded jobs and prosperity, that would be one thing. But it hasn’t. And it won’t. And eliminating the income tax entirely would make a bad situation catastrophic.

Missouri is doing better than most other states in this recession, not worse. The state’s relatively low tax rates help that. And, as a point of fact, none of the suggestions in Gov. Nixon’s speech involve getting rid of the state income tax.

Mr. Nixon’s solution: Cut more services for the poor and middle class. Lay off more state workers. Wrap it all up in clichés and euphemisms and call it “right-sizing.”

There is perhaps nothing more important, cruel as it may sound, than keeping a lid on the overall number of state workers. Almost every government employee (and I used to be one), becomes an enthusiastic advocate for higher taxes and more spending, in part as a direct result of the perverse incentive that it would directly benefit them and their families.

Blight-sizing is more like it.

And the win goes to the governor.

The post “Rightsizing State Government” appeared first on Show-Me Institute.

First, they estimated the average family size in Missouri:

average family size = (size of Missouri population) ÷ (number of resident filers)

= 5,778,901.81 ÷ 2,626,773.55 = 2.2

Next, they estimated the size of the average rebate value, using the federal poverty threshold approximation associated with a family of 2.2, which is $15,393:

average rebate value = federal poverty threshold approximation × sales tax rate proposed in HJR 36

= $15,393 × 0.0511 = $786.58

Then, they estimate the cost of the rebate system, which is equal to the amount of rebates awarded:

(average rebate value) × (number of families qualified for the rebate) = (cost of rebate system)

$786.58 × 2,626,773.55 = $2,066,167,540

Lastly, they compute ?, the revenue-neutral tax rate:

? = (government revenue + cost of rebate program) ÷ (aggregate personal consumption)

? = ($7,117,761,408 + $2,066,167,540) ÷ $158,531,333,333 = 0.0579313171 = 5.793 %

where government revenue equals the sum of individual income, corporate income, and sales taxes.

We see that the size of the tax base, ?, decreases if the amount of exemptions increase. This indicates that the sales tax needs to be assessed on a broad base in order to for the rate to remain low. By decreasing the number of exemptions that exist in the status quo, Missouri can establish a sales tax rate that’s lower than other estimates have suggested.

In their case study, Haslag and Sivasailam explain that expanding the list of services that are taxed would not result in a dramatic increase in the cost of living. In a previous post to this blog, Sivasailam elaborated on this concept:

[I]t’s important to understand that a change in the tax code implies a change in incentives. People and firms alike respond to these changing incentives in many ways, including altering their supply and demand of goods and services. With that in mind, the claim that the prices on all goods and services would increase by the tax rate is misleading.

The post “Fair Tax” Math, Elucidated appeared first on Show-Me Institute.

• The Missouri Budget Project misattributes numbers to the Show-Me Institute.

  The Missouri Budget Project claims that the Show-Me Institute revised its number to from 5.11 to 6.25 percent. This second estimated percentage belongs to former state Rep. Ed Robb, not to a Show-Me Institute publication. Furthermore, Robb’s calculations were his independent evaluation of a specific piece of legislation, not a reference to the Show-Me Institute study written by Dr. Haslag and Abhi Sivasailam.

• The Missouri Budget Project takes the exemptions out of the tax base, but they do not take them out of the rebate amount. Also, they don’t communicate why these products and services are inappropriate to tax and should therefore be exempted.
• The Missouri Budget Project ignores the issue of growth rate in its calculations.

  Assuming a rate of growth is standard procedure, and the Show-Me Institute study includes one, but Missouri Budget Project does not. Are they assuming a zero percent growth rate?

  Dr. Haslag elaborated on this point of contention in his comment responding to “Matt” on a recent blog post by David Stokes:

  The strongest case for PCE, in my view, is that reducing the tax rate on income results in faster growth. Neither MBP nor you have offered an alternative that increases the economy’s growth rate. No doubt, the tax on PCE is distortionary. To do the right experiment, we need a model of economic growth that accounts for facts observed in the world. The Ak model does so. Moreover, the economy’s equilibrium growth rate is a function of the income tax rate. By my calculations, reducing the income tax rate adds more than one-half percentage point to the state’s annual growth rate. This growth more than offsets the excess burden associated with the tax on consumer spending.

• After taking exemptions out of the tax base, the Missouri Budget Project applies the the amount of the rebate to a broad base. This is a very big difference.

  Dr. Haslag responds to this in the same blog comment:

  Along those lines, every time something is exempted, the rebate must shrink since the rebate is based on the concept of a refund on things that people buy that are subject to the tax. If you want to talk about accuracy, you should be aware that MBP and others have fixed the rebate while shrinking the tax base. In other words, they change the definition of the tax base and apply that definition while keeping the old definition of the tax base when they compute the rebate. There are two equations in two unknowns and the definitions must be the same across the two equations. MBP, citing ITEP, violate this definition across the two equations.

• The debate between the Missouri Budget Project and the Show-Me Institute concerns the size of the tax base and the size of the rebate, not the arithmetic.

  Dr. Haslag again:

  Since my calculations are made as transparent as possible, you can check my math. No one is questioning the accuracy of my arithmetic. Indeed, you are asserting my assumptions are wrong. Under your premises, my assumptions are wrong. I do not accept your premises. I digress, but I want things to be as transparent as possible.

It’s laudable that Missouri Budget Project is increasing its effort at making its analysis more transparent. At least its newest piece provides more detail about how the organization arrived at its estimate.

The post Clarification in the Fair Tax Proposal Debate appeared first on Show-Me Institute.

There are certainly legitimate arguments one might make against the Fair Tax proposal — simply stating, perhaps, a belief in in the fairness of progressive income taxation, wherein one’s tax burden automatically increases with income. I would disagree with that argument, but it is a perfectly legitimate argument to make because it doesn’t employ a demonstrably false set of facts. Repeating a figure based on a faulty set of assumptions about a proposal in order to score political points through fear, however, is not a legitimate form of argument.

The Missouri Budget Project again used its 11-percent sales tax figure in a Saint Louis Beacon op-ed today. Only a few days ago, I witnessed two economists tell the author of the MBP piece that her number was incorrect. They corrected her politely and professionally, and explained why it is wrong. Months ago, the MPB also received a copy of the Show-Me Institute’s case study, which went into great detail on the question and explained again why their 11-percent estimate is far too high. Unfortunately, they’ve continued to repeat their unreliable figure at every opportunity.

If you want to argue against Fair Tax legislation, that is fine with me. And, yes, it is likely that different people will come up with somewhat different estimates for how high the revenue-neutral replacement level of the sales tax would need to be. But if your estimate differs so dramatically from everybody else who has studied the issue that it appears to be just plain wrong, you should cease using it once that has been brought to your attention — or attempt to demonstrate where your opponents’ reasoning is faulty, in a detailed, systematic way. And if you don’t, people should stop taking you seriously.

The post The Missouri Budget Project Is Wrong appeared first on Show-Me Institute.

I am by no means an expert on this issue, but one of Blouin’s arguments against the sales tax struck me as odd. Blouin contended that if we replaced all other taxes with one simple sales tax right now, it could tie Missouri’s government to recession levels of revenue, which are much lower than normal. The first problem with that is a tax on consumption should not be any more sensitive to economic fluctuations than a tax on income — both rise and fall with the business cycle. In fact, the Show-Me Institute’s executive vice president Joseph Haslag, who is also an economics professor at the University of Missouri–Columbia, has argued that sales taxes tend to be less volatile than income taxes.

More importantly, however, even if the Fair Tax were to lock Missouri’s government into a relatively low level of taxation, what’s wrong with that? According to this chart I generated using our new “Show-Me: The Spending” tool, government spending in constant 2009 dollars has grown from $14 billion in 2000 to $19.1 billion last year — an increase of more than 35 percent.

Even as revenues fell in 2009, spending still increased at a rate of 9 percent during 2008. Maybe if revenues were to remain low, politicians and bureaucrats would learn more quickly that they cannot spend tax dollars with no thought for the long-term consequences.

The post Pick Your Poison: Income Tax or Sales Tax appeared first on Show-Me Institute.

First, low-income individuals and families would see an automatic increase in their take-home income that is equal to the amount that they currently pay in income tax. They would be able to take home 100 percent of their earnings, because there would be no income tax withheld if the Fair Tax were implemented. This would be a tremendous benefit for those who live from paycheck to paycheck. In their recent policy study for the Show-Me Institute, “Previous Estimates Overstate ‘Fair Tax’ Rates, Harms,” Prof. Joseph Haslag and Abhi Sivasailam note the following:

In Missouri, the personal income tax rate is 6 percent; if this tax were repealed, consumers would be richer by that same amount.

In addition to having more money in their bank accounts, low-income individuals and families would also benefit from a personal exemption that would help them pay for the increase in sales tax. Like most Fair Tax proposals, the Missouri bill includes a “prebate” check system that is based on federal poverty guidelines and the number of people in each family.

Plus, eliminating corporate income taxes would place downward pressure on consumer prices and increase individual income even further. This is because businesses pay for corporate income taxes by passing them onto their consumers, employees, and shareholders. They do this by increasing the price that they charge for their products and services, reducing the amount that they pay their employees, and/or by eliminating or reducing dividends to shareholders.

States that have zero income taxes experience higher rates of growth as a consequence. For example, as Jenifer Zeigler Roland and Dave Roland recently demonstrated, the absence of an income tax caused Tennessee to outgrow Missouri. And, as the saying goes, a rising tide lifts all boats. The status quo hurts low-income individuals and families because income taxes discourage economic progress and because this population is disproportionately impacted by periods of slow economic growth. Low-income individuals and families are more likely to lose their jobs, possess fewer resources to endure periods of financial hardship, and are more in need of the initial employment opportunities that a healthy economy provides.

As another benefit of the Fair Tax, low-income individuals and families would benefit from increased employment opportunities. Eliminating the income tax would attract new businesses to Missouri, and they in turn would increase employment opportunities and broaden the tax base. Missouri needs all the help that it can get right now — the state’s unemployment rate was 9.5 percent in December.

Something that critics of the Fair Tax don’t address is that it eliminates loopholes and income tax exemptions in the existing income tax system that favor some businesses and individuals over others. High income individuals and corporations would no longer be able to use such loopholes to their advantage. As a consequence, the proposal would eliminate the mechanisms that are built into current tax law that send income tax revenues toward earmarks and special interests.

The post A Rising Tide Floats All Boats appeared first on Show-Me Institute.

In Missourinet’s piece, Amy Blouin, executive director of the Missouri Budget Project, claimed:

“Childcare … that’s going to be taxed,” said Blouin. “Educational services, tutoring, private K-12 education if your kids are in a private school – a Catholic school – you’re going to pay this on those schools.”

Former Missouri Budget Director Jim Moody echoes Mrs. Blouin’s concerns and worries about the effects of the expansion of the tax base:

“That [includes] hospitals, doctors, everything in medical care,” said Moody. “So you’re going to tax, at 5.11 percent, things you’re not currently taxing – prescription drugs, medical care, hospital visits, nursing homes.”

They’re right. It’s true, all those goods and services will be taxed under the change, along with several others that have historically been exempt from taxation. Unfortunately, Blouin and Moody fail to appreciate that tax changes do not happen in a vacuum. This is a subtle point, but — as we have argued before — although the prices of these newly taxed goods would increase by the sales tax rate, several changes would simultaneously occur elsewhere in the economy to make consumers better off.

To begin with, its important to understand that a change in the tax code implies a change in incentives. People and firms alike respond to these changing incentives in many ways, including altering their supply and demand of goods and services. With that in mind, the claim that the prices on all goods and services would increase by the tax rate is misleading. In the long run, prices would increase at most by the tax rate, but this increase would be dampened by microeconomic changes.

Prices would indeed increase, but consumers would also become richer following the repeal of the income tax, and some of that reclaimed wealth would be used to protect against price increases stemming from the sales tax. Meanwhile, lower corporate and personal income taxes would create strong incentives for the inflow of people and investment funds to the state. In the long run, this translates to higher employment, higher incomes (which shield against price increases), and, ultimately, greater revenues from sales tax receipts.

In the process of presenting her case against the tax change to the state legislature, Blouin has suggested that 95 percent of Missourians would be hurt by HJR 56. It’s difficult to follow her reasoning. It is clear that 100 percent of Missourians would be affected by this policy change, but the claim that 95 percent would be hurt is unsubstantiated by the evidence. In the study I cowrote with Dr. Haslag, we presented a model that we used to compare tax burdens under both the current income tax rate and the proposed sales tax rate. We even used our own computation of the sales tax rate, 5.96 percent, which is higher than that suggested in the bill. We found that the break-even point was $60,000. At this income level, the burden under both tax systems was comparable. Because only 28 percent of Missouri tax filers in 2008 earned incomes higher than $60,000, the 95-percent figure that Blouin cites seems highly suspect. Hopefully, she will clarify her arguments and engage our own.

The post Addressing the FairTax Critics … Again appeared first on Show-Me Institute.

House Joint Resolution 36 (2009), the “Fair Tax” bill, called for replacing personal and corporate income taxes with a broad, revenue neutral 5.11-percent sales tax. The legislation also called for a tax rebate to be disbursed on the first day of each month to qualified families in the state. In our view, Missouri’s economy would grow faster if HJR 36 were enacted. However, through a combination of misinformation, miscalculation, and the promotion of myths, HJR 36 was unfairly maligned.

Related Links

The post Previous Estimates Overstate ‘Fair Tax’ Rates, Harms appeared first on Show-Me Institute.

The “Fair Tax” bill would also have eliminated the 6.25-percent tax on corporate income, a significant enticement for businesses to move their headquarters to Missouri. With the incentives the bill would create for businesses to relocate here, and for Missourians to marginally increase the number of hours they’re willing to work, its proponents expect the bill would positively impact Missouri’s economy. They plan to try again to pass it during the next legislative session.

Though the “Fair Tax” would be even more effective if passed at the national level, because there would be fewer loopholes to circumvent the tax, it would still be a boon for Missouri if passed only statewide — and the benefits it would provide to the economy would create an example for other states to follow.

The post “Fair Tax” for Missouri appeared first on Show-Me Institute.

The post The “Fair Tax” Rally In Columbia appeared first on Show-Me Institute.

I don’t recommend it only because it quotes the Show-Me Institute’s executive vice president, Dr. Joseph Haslag — although it does, which is pretty cool. There is also a great, and perfectly accurate, comment from Democratic state Rep. Chris Kelly, about the current sales tax laws:

Kelly sees his support of a consumption tax as a continuation of the 11 years he spent trying to remove sales tax exemptions. He likes the consumption because he says it is “efficient and universal.” He sees the current tax code as riddled with exemptions and favors for the very wealthy and the very powerful.

“If you own a big boat, I mean a big boat, I mean you’re a party dog … you can get your boat exempted from the sales tax by effectively donating your boat to the Coast Guard so that your boat is available to defend the people of Missouri,” Kelly said. “Like for instance if the Kansans attack down the Osage River … we will be prepared to fight hard. … We’d have our luxury boats in place.”

Former state Rep. Ed Robb gave a nice summary of the simple reason that all taxes are not equal, and state income taxes do more harm than sales taxes:

“Capital and money, they can move very easily, and they will move to areas where they perceive a better rate of return, or less tax threats, like Tennessee,” said Robb, who is seen as an economics expert in Jefferson City.

There are legitimate questions about the sales tax strategy — in particular, the Kansas City area might see a major increase in retail business moving to Kansas. But some legislators still prefer ideology to facts, and propose ideas like this one from the article:

By raising the state’s tax rate from 6 percent to 9 percent of higher personal income brackets, Oxford thinks the state would be better able to meet the challenges of funding health care and education.

“In terms of real dollars, we’re funding programs at the same levels as five, even 10 years ago,” Oxford said. “A modest increase like this would free up $1.3 billion for state-funded programs.”

A modest increase? Taking away three percent of someone’s income is a modest increase? If Rep. Oxford’s goal is to have a flood of higher-income people leave the state and take their money with them, then she’ll succeed with that proposal. Just unbelievable. …

The post Great Discussion of the “Fair Tax” in the Columbia Missourian appeared first on Show-Me Institute.