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the status quo [regarding taxes], rejecting measures that would have raised new taxes but also those that would have repealed existing ones.”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.

Our guest blogger is John Podesta, President and CEO of the Center for American Progress Action Fund.

As President Obama heads back from Asia, he faces another important week with Congress set to rejoin the debate over whether to extend expiring tax cuts.

Republicans are holding needed middle-class tax cuts hostage in order to give the richest two percent of Americans bonus tax relief in 2011. Republican leaders like to trot out the argument that extension of cuts for the wealthiest is an important tool that will help create jobs.

It’s not. It’s TARP 2, or more Tax Assistance for Rich People. And their rote rhetoric does not obscure the fact that CBO’s analysis of tax policies ranked tax cuts for the wealthiest dead last in terms of its potential to stimulate job growth. It is a highly inefficient, and devastatingly expensive, way to attempt to spur job growth and help our economy’s nascent recovery.

As the White House staff settles on a strategy for the tax cut debate, they should consider an idea put forward by Sen. Mark Warner (D-VA). He has suggested that rather than extending the tax cuts for the top two percent, Congress consider a number of business tax cuts that would be far more likely to spur job creation and more sustained economic growth. He proposed a range of possible business tax cuts to create jobs, but my favorite is a temporary tax credit against payroll taxes. That is a direct way to reduce the costs of businesses hiring new workers, and I hope the White House includes this idea in whatever proposal it puts forward for consideration at next week’s bipartisan Congressional meeting.

The kinds of ideas put forward by Sen. Warner combined with middle class tax cuts and extending unemployment insurance are far sounder as temporary measures to aid economic recovery compared to Republicans’ push to make all the Bush tax cuts permanent. We obviously cannot afford to do that, but as a temporary measure to help American workers and our economy there are better measures than TARP 2 bonuses for millionaires.

In their “Pledge to America,” House Republicans insist that one of the ways in which they plan to reduce the federal deficit is rolling non-defense discretionary spending back to the 2008 level. As Rep. Kevin McCarthy (R-CA) put it when pressed for specific budget items that he would cut, “the line item will be across the board.”

Of course, this practically means that vital and popular programs and agencies — such as Pell Grants, the FBI, Immigration and Customs Enforcement, and the National Park Service — will be subjected to huge cuts. (McCarthy, for his part, gets upset when someone points this out to him.) And as the Center on Budget and Policy Priorities noted, on its face, the Pledge also translates into a substantial cut in federal aid to states, causing those states to be even more of a drag on economic recovery than they are already:

If lawmakers were to cut appropriations for state and local governments by 21.7 percent (that is, if lawmakers reduce those appropriations in proportion to the overall reduction that would be required for non-security programs), those appropriations would be $31.6 billion below what President Obama proposed for 2011. Moreover, House GOP leaders have not specified whether they would include transportation programs in the category of programs subject to the reduction. If obligations for those programs faced the same 21.7 percent reduction, that would mean an additional $11 billion in cuts for state and local government activities related to highways, mass transit, and airports.

To put this into more tangible terms, “If Congress cut federal funding for each state- and local-run program by 21.7 percent in 2011, K-12 education would be cut by $8.7 billion, housing programs by $6.9 billion, children and family services by nearly $2.2 billion, and the nutrition program for at-risk pregnant women, infants, and young children (WIC) by $1.6 billion.”

Due to the deteriorating condition of their budgets and the fact that most of them have a constitutional balanced budget requirement, the states have been a substantial drag on the economy. In fact, cutbacks at the state and local level basically offset the effect of the American Recovery and Reinvestment Act, so that little net money was pumped into the economy. And state cutbacks also have tangible effects on the private sector: Cisco reported disappointing sales and profits in the last quarter as a result of state government orders falling 48 percent.

Over the last few months, local governments have been hemorrhaging jobs — 14,000 just last month, excluding education — which leads to decreased personal spending and higher social safety net expenditures by states and the federal government. Actually implementing the House Republican vision of the federal budget would simply exacerbate this problem.

Rep. Spencer Bachus (R-AL), who will be chairing the House Financial Services committee next year if he can withstand a challenge from Rep. Ed Royce (R-CA), is already gearing up to chip away at the Dodd-Frank financial reform law in any way he can, and one of his targets is the newly-created Consumer Financial Protection Bureau.

Republicans on the Financial Services Committee have already called for the Bureau to be defunded. But defunding is only an effective strategy for holding back the agency until July 2011, when the Bureau will begin to receive an independent funding stream from the Federal Reserve. Bachus, though, wants to ensure that the Bureau is in a constant fight for funding by subjecting it to the annual Congressional appropriations process:

House Republicans are interested in more than tinkering. Spencer Bachus of Alabama, a contender to lead the House Financial Services Committee, has said he would seek to subject the newly created Consumer Financial Protection Bureau to the appropriations process. Under the law, its funding would come from Federal Reserve profits each year.

The rationale for giving the Bureau an independent stream of funding is to isolate it from the whims of Congress and to prevent appropriators from pushing a political agenda through the agency by threatening funding cuts. The Federal Reserve and the Securities and Exchange Commission have independent budgets for the same reason.

Of course, there are plenty of other ways in which a regulatory agency can still be kneecapped: when the Bush administration was in power, it simply appointed regulators who didn’t have any interest in actually regulating. Former SEC Chairman Chris Cox is a prime example of this.

But an independent source of funding at least ensures that an agency won’t have to come before Congress begging for dollars and agreeing to whatever policy prescriptions will enable them to keep the lights on. Of course, that’s precisely the point of the House Republicans’ push: if they can’t repeal the creation of the agency outright, they want to render it as toothless as possible, so that Wall Street can continue to dream up new, expensive consumer products free from oversight.