This article first appeared in the St. Louis Beacon, Sept. 12, 2011 - Let Voters Decide, the Rex Sinquefield-funded group seeking to replace Missouri's income tax with a sales tax, has withdrawn its nine original initiative petitions already approved for circulation -- with the aim of getting at least one on the 2012 ballot.
The Missouri secretary of state's office confirmed that the nine were quietly withdrawn last Wednesday.
Let Voters Decide president Travis Brown said the nine were no longer needed because the group has recently submitted four newer ballot initiatives to eliminate the income tax and replace it with a sales tax. Brown said the remaining four "reflect nearly five years of study" and contact with a variety of groups.
The nine proposals -- submitted last winter -- had generated controversy because state Auditor Tom Schweich's required fiscal analysis declined to reach a conclusion on the ballot measures' costs to state and local governments.
The remaining four are still undergoing the approval process, including a review by Schweich's staff. Brown said his group has submitted to Schweich its analyses of the costs.
Two of the four had been submitted by the group about a month ago and are expected to be approved for circulation later this week, sources say.
The remaining two versions were submitted on Sept. 2.
Advocates say the change, dubbed the "fair tax," would encourage economic development because wealthier people would have more money to invest in job creation. They point to states such as Texas, Tennessee and Florida that do not have an income tax.
Brown's group contends that the change would spur the creation of about 20,000 new jobs annually in Missouri, which would generate more sales tax income to stabilize state budgets.
Opponents say the "fair tax" is unfair, aimed smply at helping the rich, and would lead to huge cuts in public services for education, transportation, health care and social services. They say no-income tax states have some sort of income source that Missouri lacks, such as Florida's reliance on tourism and Texas' oil industry.
Once approved for circulation, the proposals would require the signatures of roughly 147,000 to almost 160,000 registered voters. The signatures would have to be collected from at least six of the state's nine congressional districts. The number of signatures depends on which six districts are selected.
The petitions must be turned in by early May.
The remaining versions would eliminate the state's income tax gradually and replace the income tax with a larger state sales tax. The remaining versions also expand the items and services subject to the higher sales tax; some items and services, such as pharmaceuticals, are exempted.
The proposed higher state sales tax would be capped at 7 percent, up from the state's current 4 or 4.225 percent sales tax. (Local and regional sales taxes are in addition to the state tax.) At least two versions would cap all sales taxes at 10 percent.
Wealthy financier Rex Sinquefield has been a prime driver of the change as well the chief donor to Let Voters Decide. He largely bankrolled the group's successful campaign last year to persuade voters to restrict city earnings taxes.
At least two remaining versions of the repeal of the income tax would exempt real estate transactions and realtors' fees from the higher sales tax. Critics say that Let Voters Decide appears to be making an effort to quell the increasingly vocal opposition from the Missouri Association of Realtors, part of a coalition working to keep the state income tax.
The coalition, Missourians for Fair Taxation, issued an analysis today that says that the shift would "cost the state $2.5 billion (annually) in lost general revenues, forcing crippling cuts in education, health, public safety and other basic services."
"The irresponsible new sales tax structure would require devastating cuts to the services that enable Missourians and Missouri businesses to thrive," said Amy Blouin, executive director of the Missouri Budget Project, which is part of the coalition and which analyzed the proposals backers say are inspired by the so-called "fair tax."
The analysis says the cuts would represent almost one-third of the state's general revenue budget, which now totals about $7.8 billion.
According to the analysis:
- "The largest portion of the state's general revenues -- almost 35 percent -- supports elementary and secondary education. If the massive sales tax revenue shortfall is spread proportionally among various state services, public schools would be slashed roughly $868 million.
- "Social services and Medicaid would lose almost $466 million. Higher education would be cut $291 million. Public safety, prisons and the courts would lose almost $272 million. Programs for senior services, health and mental health would be cut nearly $263 million. And the state Departments of Transportation and Agriculture would each lose about one-third of their general revenue funding.
"These services provide the foundation of our economy and allow us to remain economically competitive nationwide," Blouin said. "This unfair mega-sales tax is wrong for Missouri."
Brown questioned the Budget Project's methodology for reaching its conclusions, which he called "baseless'' and "a nice scare tactic'' to mislead voters.
