Indexing: A Common Sense Proposal for Missouri…….(at least that’s my opinion!)

I posted on the campaign Facebook page today an article from the Post-Dispatch.  The over-riding point of the article is that we have a short sided view of funding important functions provided by our state.

As a small business owner and manager in this state, I can attest that thankfully Missouri is an excellent place to live, work and conduct business.  This is as it should be. 

It has been my lifelong experience that no one likes to pay taxes and more often than not feel that they are over paying and that others pay too little!  I have long tried to listen to all points of view and propose a common sense compromise that most can live with. 

The layers of taxation are numerous and at times confusing, complicated and even disguised.  Education by our elected officials, transparency and simplification when possible would also help citizens understand their actual tax burden.   It would be impossible in this post to discuss these layers at length but I do want to mention 3 taxes in particular: Mo State personal income tax, the state gasoline tax and the cigarette tax.

Missouri Income Tax:  Currently (and for many year’s prior) our MO Income Tax rate is 6% of adjusted gross income.  Without going into too much detail this is the best example I can show of a simplified flat tax and by its very nature it is “INDEXED”.  As an individual’s income increases the dollar amount paid will go up exactly proportional at a rate of 6%.  (Again I am simplifying and only referring to the marginal rate, not the effective rate!)  Bottom line:  As you make more you will pay more, but you know that rate will be fixed, at least for now at 6%.   I have always felt that the income tax was a relative bargain and we received a lot of value in return from state services.  I use the words “relative bargain”……always room for improvement from all of us!

The other 2 taxes I mention the state gas tax and cigarette taxes do not function in the same manner.  Currently these taxes are both $.17 per gallon of gas and coincidently $.17 per pack of cigarettes.  MODOT’s funding stream is not secure at this level……..the last time this was increased was 1996!  Common sense will tell us that even with VERY low levels of inflation, $.17 in 1996 is not the same as $.17 in 2016.  Add to this fact our vastly improved fuel economy, hybrids, electric cars etc…..reduce our consumption.  I am sure 99% of us consider that a very positive development, but it does imply that in the long run an alternative funding mechanism needs to be introduced.  In the short run simply indexing the gas tax to even a 1% annual inflation adjustment the tax per gallon in 2016 would be approximately $.21/gallon.  We must maintain our transportation infrastructure and all citizens benefit from this type of investment and spending. 

The cigarette tax in our state is just plain silly.  We are WAY below the national average and less than half (or more) than the next lowest state.  Again, I love fiscal responsibility but is there ANY reason our cigarette tax is $.17 per pack when Virginia, Georgia, Alabama, Arkansas and Kentucky’s are at LEAST double our rate?