To The Editor:
There has been a lot of discussion about HB253, including ads on TV and trips by the governor and some state representatives and senators. Members of the House and Senate tell us that the tax cut will be good for Missouri because it will spur economic growth in the state. The governor tells us that the sky is falling and passage of this bill will result in an economic calamity for our schools and our state.
I have been a member of the Union R-XI Board of Education for 27 years. I would never support a bill that I believed would be bad for our schools or for education in general. I decided to dig into the facts myself and make up my own mind. Here is what I found.
Every taxpayer will receive a reduction in their taxes, but the individual and corporate tax reduction steps will only happen if the Missouri tax revenue grows by at least $100 million each year. This means that to be fully implemented after 10 years (the phase-in time for the reduced rates), the state of Missouri will be collecting a minimum $1 billion more in revenue.
If the federal government allows states to collect sales taxes on Internet purchases, then there would be an additional 0.5 percent individual tax cut. All indications are that this act will not pass the U.S. House of Representatives.
In the first year of the tax cut the state will have excess revenues of $210 million. After all tax cuts are fully implemented in year 10, the state will have excess revenue of $326 million. Data for these numbers come from the Missouri Department of Revenue.
The governor and his attorney general have made an assumption that is not realistic or even constitutional to try to stop this tax cut. They have said that HB253 would allow taxpayers to file amended tax returns for the past three years at the lower rate. That is how the governor comes up with his outrageous numbers. To begin with, there is no provision in HB253 that allows this to happen. Even if there were such a provision, it would be unconstitutional under our state Constitution. Article I, Section 13 of the Bill of Rights specifically states that no ex-post facto law can be enacted. This means that they cannot pass a law that is retroactive, including reductions in tax rates. As recently as 2012 a retroactive tax cut was not implemented because of this constitutional prohibition (ref. HB 1661).
It is true that HB253 did leave out the provision for exempting sales taxes on prescription medicines. All of the lawmakers admit that this was not intended and it will be corrected in January. There is plenty of time to correct this omission since the tax on prescription medicines would not go into effect until 2015.
We have examples from President Kennedy and President Reagan of what happens when tax rates are reduced. Reducing tax rates spurs economic development and ends up raising more revenue because of this. Because of my financial background and numerous examples, I believe that the rate reductions in HB253 are reasonable and will promote economic growth in our state. This will result in more money available for education and other state services, not less. After reviewing the information for myself, I will be supporting the override of the governor’s veto of HB253.
Now you have the facts. You can draw your own conclusions.