CARTHAGE, Mo. —
The conjecture that surrounds House Bill 253 has led to wildly inaccurate assertions about the fiscal impact of the tax cut on education, which is not conducive to civil debate. If one deals in hypotheticals and not facts, the result usually is a cornucopia of half-truths, cherry-picked data and conclusions that do not hold up to rational scrutiny.
It is important to remember that the tax cut would be the first since 1927. In 1927, the state income tax was lowered from 11⁄2 percent to 1 percent, and in 1931 the income tax was changed from a flat tax to a graduated tax. In fact, the income tiers of today are the same as in 1931. Missouri’s first income tax was levied in 1917 and the rate was 1⁄2 percent and was increased in 1919 to 11⁄2 percent. In 1972, Senate Bill 549 tied the Missouri income tax to the federal government, which increased allowable deductions for Missourians.
And today we have the opportunity to once again decrease the burden on Missouri taxpayers.
Here are a few facts about the real impact of HB 253:
The biggest threat to education spending is Medicaid. Since 2002, Medicaid spending has more than doubled from $4.1 billion to $8.5 billion. And expenditures on Medicaid from state funds primarily made up of taxes on health care providers and other miscellaneous funds have gone from roughly $470 million in 2003 to $2.1 billion in FY 2012. This is an increase of 346 percent.
The Marketplace Fairness Act — Internet taxes — is currently languishing in a U.S. House subcommittee and has little chance of being brought to a vote, according to Speaker John Boehner. Boehner does not support the act, and he says it is unlikely it will come to a House vote.
The Missouri Constitution requires that 25 percent of general revenue be spent on education, and in the FY 2014 budget, spending on education is 37 percent of general revenue, 12 percent above the constitutional requirement.
Gov. Jay Nixon authored the elimination of the prescription drug sales tax exemption that was part of House Bill 253. That provision does not go into effect until January 2015.
House Bill 253 also includes a tax amnesty provision that is estimated to produce $75 million for general revenue.
The tax cut of 1⁄2 percent for individuals will be implemented over 10 years, and only if Missouri reaches a $100 million surplus.
Nixon is withholding $400 million in funds, including $66 million for education, $13 million for developmentally disabled provider rate adjustments, an initial $1 million from the Meals on Wheels Program despite the fact the Legislature increased funding for the program this fiscal year, and many others. These numbers are the governor’s. And yet he calls the Legislature irresponsible.
The governor’s actions are fiscally irresponsible and based on ideology and not economic reality. And yet the governor is using comments by the big rating agencies as a warning that implementing House Bill 253 will cost Missouri its AAA rating. There are questions about the credibility of the big three rating agencies and I have written about these concerns in a post for my Third Floor Blog. I encourage everyone to investigate their past claims regarding the soundness of the financial instruments that caused the recession in 2008.
The facts simply do not support the governor’s arguments.
Gov. Nixon is only telling one side of the story about House Bill 253. His claims that school funding will be further affected by House Bill 253 are completely unfounded and are just casting a cloud of confusion over the discussion. The facts are the facts and, while inconvenient for the governor, are nonetheless the truth. It is time to break through all the noise and clutter surrounding HB 253. The legislature should side with the taxpayers and override the governor’s veto.
Rep. Tom Flanigan, R-Carthage, is chairman of the Fiscal Review Committee.