Tuesday morning I participated in a presentation on the elimination of the personal income tax and replacing it with a consumer driven sales tax generically termed the Missouri Jobs Act (MJA). The opponents of making Missouri the economic engine of the midwest continue to try to tar and feather the proposal with spurious information and half-truths.
The primary objective of these tactics is obvious. If they can scare you enough, you will at least be uncertain. We all know how we vote when we are uncertain.
The facts don’t support most of the allegations against the elimination of the personal income tax. The whole truth, dispels most of the other allegations. What about the rest? They become a matter of opinion.
Many of the allegations are outright false or at a minimum deceptive. This doesn’t stop the opponents from using them just in case it catches enough people. They know they don’t have any one “killer” argument but if they throw enough your way, they might create the uncertainty they are looking to establish. Let’s look at a couple of examples of red-herring allegations against the MJA.
MYTH: The Missouri Jobs Act is just the National Fair Tax in disguise – FALSE.
The MJA does share the fact that it would eliminate the personal income tax and replace it with a consumer driven sales tax but that’s pretty much the extent of the similarities. Stating that the MJA was developed or based upon the “Fair Tax” book is patently and demonstrably false.
The MJA is definitely patterned after Tennessee’s successful working tax model which existed long before the Fair Tax proposal. Tennessee is kicking Missouri’s economic tail in all most every measure. As an example, how many Fortune 500 company does Missouri have left? How many are there in Tennessee, most of which have recently located there?
You wouldn’t think this would be a “scare” tactic but the opponents think it is. The Democrats used it against many Republicans in the last election cycle on the national level and in at least one state representative race in Missouri. It didn’t work in the latter where the incumbent lost and it really didn’t work on the national level either if you look at the data.
If this isn’t true, why do opponents say it is? We can’t totally dismiss the fact that they may actually believe it. But aside from trying to scare people who might be scared by the National Fair Tax for similar reasons of demagoguery, they have to tie it to the National Fair Tax to substantiate their next false allegation.
MYTH: The MJA requires at least a $2.1 billion rebate requiring the tax rate to be much higher than 7% – FALSE
The opponents use the National Fair Tax as the basis for attacking the proposal as being extremely regressive for low income folks. The regressivity argument is way over stated but the opponents know it catches people’s attention. We will be providing lots of information disputing the alleged regressivity “fact” in later blog postings.
The opponents reason that because of the alleged extreme regressivity of the National Fair Tax that a prebate is necessary to offset it. So, if the MJA is just a junior version of the National Fair Tax, I refer you to the previous debunked myth, then by definition it is also regressive.
They then reach out to a Show-Me Institute study that said a bill that was sponsored in the legislature would require a $2.1 billion rebate, a different form of the prebate. Sounds logical, well documented and believable, right? WRONG!
Problem is, that their argument uses information that may or may not have applied to a specific bill in the legislature 2 or 3 years ago but definitenly not to the MJA today. In this case, the legislative bill spelled out a very specific formula for calculating the rebate. The MJA does not and in fact some versions do not have a rebate at all.
The truth is if you don’t tax essentials such as the Tennessee model which the MJA is patterned after, you don’t need a rebate. The regressivity issue is addressed at the cash register and is not a factor.
Bottom line is that opponents of the MJA are undeterred at using dated, inaccurate and downright false information in opposing the measure. Tennessee collected over $6.3 billion in FY2010 on a 7% state sales tax rate applied to a smaller sales tax base. The MJA applies the best of the Tennessee model and makes some improvements.
Most of those trying to dissuade Missourians from supporting tax reform aren’t really bad people. There is no doubt that they are significantly off-base in their opposition to the MJA however.
You can expect to see here several more fact based blog postings that will dispel these opposition efforts for what they are – sad attempts at keeping Missouri from becoming an economic engine!
I’ve included a slide show that demonstrates the basics of the proposal and why some of the false accusations just don’t hold water.