Missouri is a low tax state. Gov. Eric Greitens wants to take it even lower.
Greitens unveiled details of a promised tax cut in a cross-state tour this week. Highlights of the proposal include reducing the personal income tax rate by 10 percent and the corporate income tax rate by 32 percent.
While the governor’s tax cut play is not sound policy, it does make for smart politics. The timing is spot on.
It gives the former Democrat an opportunity to burnish his Republican bonafides and change the conversation from his recent sex scandal.
It’s hard to argue that the tax reform package President Trump signed into law on Dec. 22 hasn’t contributed mightily to a stock market surge and soaring economic confidence.
Hardly a day goes by without another company announcing bonuses, pay hikes or other kinds of benefits as a result of the president’s tax plan. 401(k)plans are thriving.
The economy is roaring and Trump can rightly claim credit for it as he unabashedly did in his State of the Union address earlier this week.
There may be a reckoning somewhere down the road if the current boom goes bust and the national deficit derails the economy. But few seem to care right now. We are not hearing many complaints. It’s happy days again for millions of Americans.
Greitens is wise to channel Trump in his move to cut state income taxes to create some goodwill and headlines of his own. His administration needs a reset.
His plan to make the tax cuts revenue-neutral by offsetting the cost by eliminating some unnecessary tax breaks and raising revenue elsewhere is a sound approach.
One of those measures is to have Missouri collect sales taxes on all online purchases as 24 other states do. This is a proposal that is long overdue. Another component of his plan would eliminate the “timely filing” discount for companies that pay their sales taxes on time, which we’ve never understood.
But make no mistake about it, there are real risks to adopting Greitens’ plan. He insists his tax cut plan is revenue-neutral. We have our doubts.
If he is wrong, it would exacerbate the state’s existing budget shortfall, which could be as high as $240 million this fiscal year. That is on top of the over $500 million in cuts to last year’s budget.
Cutting taxes at a time when the state is having to reduce spending on social services and higher education, and is in serious need of additional revenue for infrastructure is shortsighted.
The federal government doesn’t have to balance its budget, the state of Missouri does. If a supposedly revenue-neutral tax cut misses the mark, our state will feel the impact through even more cuts. Real people and worthy programs will suffer.
It’s not worth the risk.