Killing Missouri’s income tax would balloon your shopping receipts | Opinion
A story about aging I read recently brought to mind the importance of time and distance in retail commerce.
The total population of Missouri is approximately 6 million. The combined population of Missouri counties that adjoin a bordering state is 4 million. Theoretically, two-thirds of all Missourians could be shopping in another state within an hour or less.
A few years back, Kansas increased the tax on tobacco products and nearby Missouri stores saw an immediate uptick in cigarette sales. The Missouri sales tax holiday before the start of the school year, and the accompanying boost to stores’ revenue, is also evidence of tax rates affecting retail commerce.
Major political donor Rex Sinquefield has devoted lots of money and effort to changing Missouri tax policy. He has long advocated to eliminate the state income tax and replace it with a sales tax. Sinquefield enthusiastically supports politicians who agree with him and just as vigorously opposes any disagreement. His millions in donations have gone primarily to Republicans (he gave $750,000 to Mike Kehoe’s campaign for governor), but he will clash with anyone who dares oppose his wishes. Few Republicans do. Kehoe said killing the state income tax is a top priority for this year.
Sales tax and its evil twin, use tax, are misnomers for what they really are: purchase taxes. The battle cry of “Tax what I spend, not what I earn!” pretty well explains it.
The state of Missouri collects 4.225% sales tax on nonexempt items when purchased at retail. This tax is in addition to any local tax supporting fire departments, libraries, museums, ambulance service, health clinics, entertainment districts and so on.
The first 3% of the 4.225% state sales tax goes into the state’s general revenue account to help pay the everyday expenses of the state government. The remainder is divided between education (1%), conservation (0.125%) and parks and soils (0.1%).
It has been estimated the state sales tax rate would need to increase from 3% to at least 10% with the elimination of income taxes. Many Missouri counties already charge local rates of 10% and above. That means sales receipts in some parts of the state could show a total tax of 20% and higher when local tax is added.
A majority — two-thirds — of Missourians could be free of income tax and at the same time avail themselves of lower sales taxes charged in an adjoining state. The expense of the government would be borne by the state’s residents. Border county merchants would be hard-pressed to meet lower prices found in adjacent states.
Why any border county merchants would support eliminating the state income tax is a mystery to me.
Taxes in and of themselves are not a great problem when fairly shared. The exemptions and exclusions are what make them so unfair and so hated. For example, the necessity of clothing is subject to sales tax in Missouri, but many items used in farming are not. A farmer’s pitchfork is not taxed, but a carpenter’s hammer is. A farmer’s corn planter is exempt from sales tax, but a grocer’s cooler to display the corn is subject to sales tax. A farm tractor is exempt from sales tax, but a restaurant cook’s stove is taxable. The reasoning escapes me.
Our state’s tax policies are confusing and often illogical. I would like to hear Rex Sinquefield and his allies in Jefferson City explain why a child’s mittens should be taxed, and hog rings are exempt.
Stanley Robinson is a retired science teacher, business owner and farmer from Mercer County. He lives in Kansas City.
