Tuesday, January 11, 2011
Rex’s Petitions
The Rex Sinquefield team apparently hasn’t settled on what variation of their latest effort, the elimination of the state income tax, they’re going to pursue.
The current nine petitions in the mix represent different angles on that single thrust. Some would eliminate the corporate income tax, in addition to the individual income tax. Some would exempt higher education or secondary education. Interestingly they all exempt health care.
This is interesting because it’s a substantial chuck of the economy and taking it off the table makes their math harder if they intend to argue that their proposal will be revenue neutral.
The Philosophical Underpinnings
The broad theory here is basically that you tax behavior you want to deter, not behavior that you want to encourage.
Therefore because we want people to enjoy higher incomes, we shouldn’t be taxing that. Taxing income will drive income-producing behavior to places where it’s less taxed.
A sales tax is less noxious in this high-level kind of thinking because we’re a society which consumes more than we produce (trade deficit). Lessening our consumption will incent people to save more, help capital formation, lower interest rates etc. Similarly exempting something like education would hopeful spur more investment in human capital, a factor in economic growth.
Supporters of cutting incomes taxes often cite the “Laffer curve” which helps visual the notion that sometimes higher income tax rates can so deter income-producing activity that they actually lead to less tax revenue.
While the theory is tenable, there’s no agreement on what the “curve” looks like. In this particular situation the question is: does Missouri’s 6% income tax so deter economic activity that eliminating it and shifting the tax burden to another kind of base would ignite growth?
(For what it’s worth, I’m of a different mind, economically. I tend to believe in the hazy parts of the human soul – the intangibles, the unknowns – driving a lot of human action. Tax rates are just one consideration, like 70 degree weather, or where your mother lives, when trying to decide whether or not to move into or out of Missouri.)
Starve the Beast?
Because the petitions cap the sales tax at 7%, the “growth” piece of the argument here is essential, and still probably insufficient, to overcome the loss of the 6% income tax.
As mentioned before, with health care expenditures exempted, that takes about $30 billion off the table, and makes it harder to expect that there wouldn’t be a significant budget gap as a result.
This will be one part of the campaign against the effort.
Real Estate’s Ground Firm or Shaky?
The real estate lobby looks astute for getting in front of this wave last cycle by passing their “stop double taxation” initiative to prevent real estate transactions from being taxed.
However it’s unknown whether it would survive a challenge from a conflicting initiative calling for an inclusive, broadened sales tax base.
Political Prospects
It’s those sort of constituencies though – the realtors for example – which will likely sink this proposal.
On the ground there will be anxious constituent groups facing new taxation because of this plan – labor union dues are thought to be subject to the new tax, as would services like attorney fees. And there will be fretful groups fearing possible cuts if a budget deficit results.
That will make it a much harder sell than last cycle which just targeted Missouri’s lonely coastal cities.
Ed Martin Watch – (Sorry Can’t Help Myself)
Politico says that Jim Talent doesn’t have the stomach for a Sarah Steelman – Claire McCaskill one-two punch. Ed Martin’s all stomach. No problem there.
Martin pens a piece for the Missouri Record this morning – “The Case Against McCaskill.”
But – because the guy is apparently scoping out every race it seems – rumors say that Martin recently met at length, in private, with Senate Redistricting Chair Scott Rupp.
Senate Committees
It’s a start. Yesterday President Pro Tem Rob Mayer announced three committee assignments. These are the plumbing committees, not the “exciting” ones.
Committee on Rules, Joint Rules, Resolutions, and Ethics
Sen. Tom Dempsey, Chairman
Sen. Bob Dixon, Vice-Chairman
Sen. Robert Mayer
Sen. Jack Goodman
Sen. Brad Lager
Sen. Jolie Justus
Sen. Timothy Green
Committee on Administration
Sen. Robert Mayer, Chairman
Sen. Tom Dempsey, Vice-Chairman
Sen. Jack Goodman
Sen. Victor Callahan
Sen. Robin Wright-Jones
Committee on Gubernatorial Appointments
Sen. Robert Mayer, Chairman
Sen. Tom Dempsey, Vice-Chairman
Sen. Jason Crowell
Sen. Bob Dixon
Sen. Brad Lager
Sen. Rob Schaaf
Sen. Eric Schmitt
Sen. Victor Callahan
Sen. Ryan McKenna
The lacks of committees to take legislation was cheered by one advocate in the halls who expects to be mostly on defense this session. Time off the clock in the first quarter and time off the clock in the fourth quarter all accomplish the same goal.
The House meanwhile advanced House Resolution 39 with Rules passing it out. It calls on Chris Koster to join the other states in suing to overturn the new health care law.
Bits
More smoking restrictions are coming to the Capitol. The House is talking about ending smoking in the side gallery. But members would still be allowed to smoke in their individual offices.
Session starts and folks are clearly feeling their way, looking for that right 2011 look… Kit Crancer in suspenders… Jarad Falk in a sweater vest
Governor Jay Nixon commuted the sentence of a convicted murderer yesterday. It was considered a surprise because he’s been a strong supporter of the death penalty.
Lobbyists Principal Changes
From the Peolopidas website:
Tom Carter added Branson Sport Entertainment Complex LLC and deleted Alanco Technologies Inc.
$5k+ Contributions
United Food & Commercial Workers Local #655 PAC - $6,500 from United Food & Commercial Workers Local #655 PAC.
MO Democratic State Committee - $5,500 from Citizens for Mike Talboy.
Birthdays
Scott Intagliata celebrates the big 5-0 today.