Will Missouri’s Incoming Republican Lawmakers Eliminate The State’s Income Tax?

On election day, as the New York Times’ David Leonhardt put it, “voters mostly chose the status quo [regarding taxes], rejecting measures that would have raised new taxes but also those that would have repealed existing ones.”

However, one state may be facing an incoming class of lawmakers ready to blow a hole in its tax base. Last year, a bill to eliminate Missouri’s income tax (and replace it in part with regressive hikes in the sales tax) passed the state House but flopped in the Senate. However, huge pickups by the state GOP means that elimination of the income tax is back on the docket:

Gleeful Republicans in the Missouri House of Representatives said Wednesday that they will use their historic majority to make state government smaller and Missouri more business-friendly. Speaker-elect Steve Tilley said their agenda will include a measure eliminating the state income tax and replacing it with a higher sales tax.

Completely eliminating the Missouri income tax would cost the state about $6 billion, when the state is already facing a nearly $1 billion shortfall in its 2012 budget. Missouri business groups are also pushing the new GOP legislature to repeal the state’s corporate income tax, costing another $500 million.

Missouri already has a slightly regressive state tax system; those in the lowest income quintile can expect to pay about 10 percent of their income in state and local taxes, while those in the top one percent will pay about 5.4 percent. So why implement a change that will make the tax code even more regressive?

Well, in addition to furthering the general conservative goal of having marginal tax rates be as low as possible, regardless of their effect on government deficits, Citizens for Tax Justice says it’s a matter of following the Missouri GOP’s money:

Speaker-elect Steve Tilley has said that this plan to weaken and undermine the state’s tax structure is one of his top priorities. Not surprisingly, this proposal is strongly supported by Rex Sinquefield (bankroller of Proposition A — which eliminated the right of local governments to have local income taxes). Sinquefield reportedly gave Speaker-Elect Tilley $200,000 in campaign contributions even though Tilley ran unopposed in both the primary and the general election.