Advocates push to end Missouri state income tax
February 14, 2012 - 1:07pm — Anonymous
Story by Tim Sampson
Supporters in favor of abolishing Missouri’s individual income tax in favor
Supporters of the so-called “Fair Tax” initiative argue a radical change is necessary to the state’s tax code in order to grow Missouri’s economy. They argue the income tax – the state’s largest single revenue source – can be replaced with a 7 percent state sales tax. But opponents of the plan call it little more than magical thinking by pro-business groups.
“Missouri’s GDP growth is 48th in the nation and we think that’s just unacceptable,”
Speaking at a debate in the state capitol this week sponsored by the Associated Press and the Missouri Press Association, Moy compared Missouri to some of its neighboring states to make the case for abolishing the income tax.
Let Voters Decided has received about $2.5 million from Missouri businessmen and conservative political activist Rex Sinquefield to help advance the issue.
Under their proposal, the income tax would be abolished and the state sales tax would be raised from 4.25 percent to a 7 percent maximum rate. The plan would also cap local sales tax rates at 3 percent.
Moy argued in favor of her organization’s plan, showing that states such as Tennessee, Washington and Texas that don’t have personal income taxes have had stronger GDP growth in the last 50 years, ranking 20th, 15th, and sixth in the nation respectively.
“Every three minutes, Illinois loses a job since implementing this tax
But opponents of the legislation accuse Moy and others of twisting the facts from other states to help support their cause. Jim Moody, a lawyer for the opposition group Missourians for Fair Taxation, argued that the plan as currently proposed in Missouri would not compensate for the loss of income from abolishing the income tax.
“Missouri government tax revenue is like a three-legged stool and they’re
He noted that Tennessee, often cited as the golden boy example of what could happen if Missouri were to eliminate its income tax, has a number of other revenue streams
Moody also pointed out that even though Tennessee’s GDP growth may be stronger, Missourians still enjoy a higher average per capita income $36.979 compared to Tennessee’s $35,307.
He also said that many local governments in Missouri that currently have a sales tax
“The basic premise of all this is that you can eliminate the individual income tax, replace it with an increased rate of less than 3 percent, slightly broadening the base and replace all existing revenue,” Moody said. “And that’s not true.”
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