The Missouri Jobs Act (MJA), an updated presentation can be found here, would replace the current state personal income tax with a broad base consumption tax. It would make Missouri more attractive to a broader base of citizens from retirees to companies looking for a great place to do business.
You wouldn’t think there would be people against giving Missourians an instant and permanent payraise and the opporutnity to create jobs for you and your kids – but there are. One of the common, false refrains the opponents use is “the plan will not raise enough money for the state to function.” Those who make this statement are either uninformed or being disingenuous. They ignore the fact that Tennessee raises more money on a smaller sales tax base. But then we would be confusing them with the facts!
The MJA is modeled after the successful Tennessee plan. When we unpack the stats comparing Tennessee and Missouri you can see that there is a a significant difference in tax policy between the two states and it’s not tipped in Missouri’s advantage. If what the opponents say were even remotely true, the stats would look much different. The opponents are trying to change reality into fiction. Let’s look at the facts.
Tennessee has a state rate of 7%. Tennessee taxes approximately 37.6% of their base. They don’t tax healthcare, pharmaceuticals and many other things that the MJA would not tax. In FY2010, they collected $6.3 billion.
The MJA only replaces the state personal income tax. It does so by broadening the current sales tax base. It taxes most of what Tennessee taxes plus the items above. Here’s What Missouri’s General Revenue would have looked like in FY2010. The percentages on the chart are what the current areas collected:
Now let’s compare Missouri revenues with the implementation of the MJA. In addition to broadening the general sales tax base and taking the rate (currently 4.225%) to a maximum of 7%, all other sales taxes in existence today will be recalculated and the rates reduced. This is possible because the base will be larger than it is today. The MJA also retains the Senior Circuit Breaker (property tax refunds). Here’s what the revenue charts look like on a:
It really doesn’t take a rocket scientist or an economist for that matter to see that the MJA will deliver adequate revenue. The only reason to say it won’t – that schools will suffer and life will cease to exist as we know it – is because of ignorance which we all know is no excuse.
Sadly, many of the opponents are not ignorant but rather big government supporters. They know the current system. They work the current system to their maximum benefit. And they don’t want anyone to interfere with that relationship.
I think it’s past time we tell the big government folks “WE ARE TAKING BACK OUR STATE!”