Thursday, February 22, 2018

House Tax Reform Plan

Today the House will unveil its tax reform plan.  Look for Speaker Pro Tem Elijah Haahr to file the bill this morning.  Haahr apparently huddled with other House members who have worked on the tax issue including Reps. J Eggleston, Travis Fitzwater, Mike Kelley and Speaker Todd Richardson.

The centerpiece of this plan is to cut both the personal income tax and the corporate income tax rate to 5%.  That’s .9% lower from the current individual rate, and 1.25% lower from the current corporate rate.  There’s a very strong case to be made that it’s good policy to tax individuals and corporations at the same rate.   It helps to prevent one of the problems with Kansas’ approach where people created LLCs in order to avoid taxes.  Taxing everything the same is the surest way to prevent loopholes in the code.

Because the goal is to recreate a revenue neutral package, there are tax increases in the plan to offset these cuts.

Most have been floated before either in the Senate plan, or in the governor’s plan: phase out the federal tax deduction for state income tax; move to a single sales factor; implement the streamline sales tax; and eliminate the business discount for filing sales tax on time.  Additionally this plan would eliminate the renters’ portion of the circuit breaker tax credit.  And it would add a new managed care organization tax which would work like the current FRA tax to pull down matching funds from the federal government.

Whereas the Senate plan has a gas tax to fund increased transportation spending, this House plan is looking to license and tag fees to earmark for that purpose.  It would raise these fees to bring them up to where they would be if they’d been indexed for inflation when they were created in 1984.  And then it would continue to increase them every three years according to inflation.  This would bring in an estimated $2 billion over ten years.

This is serious plan.  And it’s not too far off from the Senate plan.  It makes you think that if the Senate can get their bill over to the House, it wouldn’t be an impossible task for a conference committee to bridge the chasm.  I’m still a doubter, but you never know.

Q&A#1: For What Reason is Dowd Bennett Hiring Axiom’s Lobbyist?

Short answer: We’ll see….

Aaron Baker registered to represent Dowd Bennett LLC.  Baker works for Republican political consultant Jeff Roe.  I talked to some folks to try to suss out what exactly Baker will be doing for Dowd in the Capitol.  Three theories emerged.

First, Dowd Bennett has heard its name mentioned on the Senate floor at various times, and sees that they’re mentioned in a Senate Resolution, so they’re hiring a lobbyist to communicate with legislators, answer questions and make sure the role they’re playing is clear.

The second theory is a little sketchier.  It’s that Baker isn’t really going to be doing much anything.  His registering was an attempt to send a signal.  By having Dowd Bennett hire Axiom, it’s hoisting a flag saying that Roe is on Team Greitens and everyone who’s with Axiom should get on-board.  The motivation would be to help shore up House members who are tiring of the governor’s scandals and investigations.

The third theory is plainly unlawful.  It’s that Baker is actually being hired by the law firm to represent the governor’s interests.  That is, to lobby legislators not to investigate the governor, or – in preparation of a possible indictment – to lobby against impeachment.

The statutes are clear that there is to be no “dark lobbying.”  If the law firm hires someone to represent the interests of one of their clients, the lobbyist must register in the client’s name.

Each lobbyist shall, not later than January fifth of each year or five days after beginning any activities as a lobbyist, file standardized registration forms, verified by a written declaration that it is made under the penalties of perjury, along with a filing fee of ten dollars, with the commission.  The forms shall include the lobbyist's name and business address, the name and address of all persons such lobbyist employs for lobbying purposes, the name and address of each lobbyist principal by whom such lobbyist is employed or in whose interest such lobbyist appears or works. 

Failure to do so is a criminal offense, by the way.

And here’s an MEC opinion reiterating it.

MCN Calls Walsh “Judas Dixiecrat”

Sen. Maria Chappelle-Nadal kicked SB 892 of the consent calendar.  Its sponsor is Sen. Gina Walsh.  From Chappelle-Nadal’s letter to the Secretary of the Senate: “I find myself cast out in the cold by a Judas Dixiecrat… I will never give up the fight for progressive Democratic values. I ask you to remove the SCS/SB 892 from the Consent Calendar, as it calls for prosecuting attorneys to receive full time privileges, while I am denied the full benefits of my position. It is in the best interest and reputation of this body I speak out against this double standard…”

Moley for County Collector

On Twitter former Rep. Chris Molendorp‏ announces… “I’m thrilled to announce I’m filing Tuesday morning for Cass County Collector!  I’m excited to serve our community.”

Fed Tax Cut To Hurt Affordable Housing Incentive

Governing Magazine reports that the change to the federal tax law will likely reduce the incentive to create affordable housing.  See it here.

“[B]ecause of the new tax law, the affordable housing shortage is expected to get worse.  By one estimate, developers will build nearly 235,000 fewer affordable rental units in the next decade. The reason? Congress diluted tax incentives that fueled the construction and rehabilitation of low-cost rental housing…

The primary way that all levels of government (federal, state and local) facilitate the production of affordable housing is through the federal Low Income Housing Tax Credit, which Congress created in its last major tax package under President Ronald Reagan. Between 1995 and 2015, the tax credit spurred the creation of more than 2 million affordable housing units, according to the U.S. Department of Housing and Urban Development (HUD).

The Tax Cuts and Jobs Act that Congress passed just before Christmas, however, makes that tax credit less attractive. Now that the corporate tax rate is only 21 percent (down from 35 percent), affordable housing investors (which are mostly banks) will owe significantly less in taxes and have less of a need to buy tax credits from developers…

Taking the M out of STEM?

Yesterday I linked to the St. Louis Regional Chamber’s support of a proposal to allow students to count computer science as a core graduation credit.

Here’s the other side… “[We should support a] policy that promotes computer science, and still ensures that high school coursework will allow students to pursue post-secondary options if desired… Most of Missouri’s colleges and universities require a minimum of three units in math and 3 units of science for admissions.  Most of Missouri’s colleges and universities will NOT allow computer science to satisfy admissions requirements, including: University of Missouri, University of Missouri–Kansas City, Missouri Institute of Science and Technology, Southeast Missouri State University, St. Louis University, and Washington University…”

If You Read Only One Thing This Morning

Washington Post has an article about untested rape kits.  “A Wrenching Dilemma. Across the country, decades’ worth of rape kits are finally being tested, but no one can agree on what to do next. A story of good intentions — and government blunders…” See it here.

In Missouri two relevant bills: Rep. Cora Walker’s HB 2462; and Sen. Jeanie Riddle’s SB 958.

Lobbyists Registrations

Aaron Baker added Dowd Bennett LLP.

Jeremy LaFaver added Kids Win Missouri.

Steve Tilley, Thomas Robbins, and Shawn Rigger added Mission St. Louis.

$5K+ Contributions

We Are Missouri - $10,000 from Leonard Dino.

MBA River Heritage Region PAC - $10,000 from First State Community Bank.

Find the Cures - $55,000 from Bradley Bradshaw.

We Are Missouri - $11,000 from IUPAT Political Action Together Political Committee.