A Democratic House Appropriations Committee chairman has proposed a bill that would slash income tax while expanding sales tax, a proposal similar to a Republican-supported tax plan to completely abolish the income tax.
Rep. Chris Kelly, D-Columbia, has proposed a bill to temporarily expand Missouri's sales tax, lower the income tax and abolish the corporate income tax in order to collect revenue for the state.
In the last budget year, the income tax generated more than $5.5 billion, the sales tax generated more than $1.8 billion and the corporate income and franchise tax generated more than $500 million, meaning an overwhelming majority of the General Revenue comes from the income tax. The sales tax would have to generate more than $4 billion in the fiscal year to make up for losses if the income tax and corporate income and franchise tax were completely eliminated.
Another appropriations committee member, Rep. Pat Conway, D-St. Joseph, said he does not support Kelly's bill because the income tax is a more reliable way to collect revenue for the state -- a problem also posed by the "fair tax."
"My main concern is with the fair tax, which proposes to raise the sales tax 7 percent, and we aren't sure how to collect on that. I think we are going to have to figure out what type of government mechanism would be used," Conway said.
Kelly said there are three main problems that arise with implementing a more extensive sales tax:
The amount of revenue the state would receive from a sales tax is unknown.
A sales tax is regressive, meaning it will impact poorer consumers more than richer ones.
Consumers could avoid the tax by shopping out-of-state.
However, Kelly pointed out that the bill includes a rebate for citizens based on their income, which would alleviate the strain on those with lower incomes.
No comments:
Post a Comment