Mike Parson, the current Republican Governor of Missouri recently stated that he wants to enact an online sales tax in Missouri in order to add much needed revenue to Missouri’s budget:
Missouri Gov. Mike Parson says he wants to enact a law that would enable the state to collect millions of dollars of new tax revenues from online sales.
Parson told The Associated Press on Tuesday that he wants the Legislature to take advantage of a U.S. Supreme Court ruling that gives states the ability to collect sales taxes from out-of-state retailers who sell items to their residents.
The Republican governor said the new online sales tax collections could generate between $100 million and $150 million annually for the state, though he emphasized those are only estimates.
The online sales tax proposal will be part of Parson’s agenda for the legislative session that starts Jan. 9.
Recall that in 2014, Republicans in Missouri’s state legislature overrode the veto of the former Democratic Governor and instituted tax cuts for the wealthy that have amounted to nearly an annual billion dollar loss in the State’s revenue:
The Missouri House acted quickly Tuesday to override Gov. Jay Nixon’s veto of a tax-cut bill that is estimated to cut the state’s revenue by about $620 million a year when fully implemented.
The former Democratic Governor had vetoed the tax cut because it went overwhelmingly to the wealthy:
The Democrat argued that 52 percent of the tax savings would go to the top 7 percent of taxpayers, while a family making the median income of $44,000 a year would receive a tax cut of only $32.
The Republicans in Missouri’s state legislature of course saw no problem with the fact that the tax cuts would go primarily to the rich. That was probably the point of the tax cuts in the first place. So, they overrode the Democratic Governor’s veto and passed them. The predictable result? Huge budget deficits, and budget cuts, to things like home health care for seniors and education:
On Friday, the governor signed the new budget and then cut $251 million in spending, including $24 million for higher education and $12 million to hospitals, nursing homes and in-home care providers.
Missouri’s infrastructure spending has also continued to languish thanks to the tax cuts for the wealthy that were passed by the state’s Republicans, and the state’s roads and bridges have paid the price:
In the Association’s report, Missouri ranked fourth in the nation in the total number of structurally deficient bridges with more than 3,000 state, county and city bridges, which is about 13 percent of the state’s total.
Missouri lawmakers have struggled to find a way to pay for repairs along thousands of miles of highways and bridges, and it’s unclear if that might change in the near future.
Now, as budget deficits loom on the horizon for the foreseeable future in Missouri, and as residents grow frustrated with budget cuts to health care, education, and infrastructure spending, the current Republican Governor is looking for ways to bring in more tax revenue. Now, he could try to reverse those 2014 tax cuts that mostly went to the rich. But, instead, he wants to increase sales taxes, which are disproportionately paid by the poor and middle class.
This is what always seems to happen when Republican politicians cut taxes for the rich: they replace that lost revenue with increases to sales taxes, gas taxes, tolls, and fees, which are paid disproportionately by the poor and middle class. This is why there are so many states that now have regressive tax burdens, where the poor and middle class end up paying a higher percentage in taxes than the rich:
- The vast majority of state and local tax systems are inequitable and upside-down, taking a much greater share of income from low- and middle-income families than from wealthy families. The absence of a graduated personal income tax in many states and an overreliance on consumption taxes contribute to this longstanding problem.
- The lower one’s income, the higher one’s overall effective state and local tax rate. On average, the lowest-income 20 percent of taxpayers face a state and local tax rate more than 50 percent higher than the top 1 percent of households. The nationwide average effective state and local tax rate is 11.4 percent for the lowest-income 20 percent of individuals and families, 9.9 percent for the middle 20 percent, and 7.4 percent for the top 1 percent.
- Tax structures in 45 states exacerbate income inequality. Most state and local tax systems worsen income inequality by making incomes more unequal after collecting state and local taxes. Five states and the District of Columbia somewhat narrow the gap between lower- and middle- income taxpayers and upper-income taxpayers, making income slightly more equitable after collecting state and local taxes.
- In the 10 states with the most regressive tax structures (The Terrible 10), the lowest-income 20 percent pay up to six times as much of their income in taxes as their wealthy counterparts. Washington State is the most regressive, followed by Texas, Florida, South Dakota, Nevada, Tennessee, Pennsylvania, Illinois, Oklahoma, and Wyoming.
- Heavy reliance on sales and excise taxes are characteristics of the most regressive state tax systems. Six of the 10 most regressive states derive roughly half to two-thirds of their tax revenue from sales and excise taxes, compared to a national average of about one-third. Seven of these states do not levy a broad-based personal income tax while the remaining three have a personal income tax rate structure that is flat or virtually flat. A calculation of effective sales and excise tax rates finds that, on average, the lowest-income 20 percent pay 7.1 percent, the middle 20 percent pay 4.8 percent and the top 1 percent pay a comparatively meager 0.9 percent rate.
- A progressive graduated income tax is a characteristic of the least regressive state tax systems. States with the most equitable state and local tax systems derive, on average, more than one-third of their tax revenue from income taxes, which is above the national average of 27 percent. These states promote progressivity through the structure of their income taxes, including their rates (higher marginal rates for higher-income taxpayers), deductions, exemptions, and use of targeted refundable credits.
- States commended as “low-tax” are often high-tax for low- and middle-income families. The 10 states with the highest taxes on the poor are Arizona, Florida, Hawaii, Illinois, Indiana, Iowa, Oklahoma, Pennsylvania, Texas, and Washington. Six of these are also among the “terrible ten” because they are not only high-tax for the poorest, they are also low-tax for their richest residents.
When Republican politicians cut taxes for the rich, they rarely end up just cutting taxes. Instead, they usually end up shifting the tax burden from the rich to the poor and middle class. This is class warfare, and with the help of Republican politicians, the rich are winning.