Missouri lawmakers are promising tax cuts while making the math harder

The Missouri House considers legislation Feb. 9 (Tim Bommel/House Communications)

The legislature offered a near-perfect snapshot of itself last week.

On Thursday, the Missouri House advanced a proposed constitutional amendment designed to phase out the individual income tax and give lawmakers broad authority to expand sales taxes to replace lost revenue.

Soon after, the same chamber approved a carveout from that very tax base, creating a new sales tax exemption for equipment and materials used in certain public improvements.

This is not hypocrisy. It’s cognitive dissonance: an urge to promise tax cuts, warn of fiscal strain, preserve favored projects, create new exceptions and somehow insist the arithmetic will sort itself out later.

In Jefferson City, the appetite for lower taxes remains absolute. The appetite for the tradeoffs those cuts may require remains highly selective.

Depending on how you feel about it, the proposed constitutional amendment is either an ambitious or reckless plan. It would put Missouri on a path to eliminate the individual income tax, using triggers tied to general revenue growth. It would also remove a constitutional barrier that now limits the expansion of sales taxes to services and other transactions not taxed as of Jan. 1, 2015 — from haircuts and legal services to streaming subscriptions and home repairs.

Under the proposed language, lawmakers could expand sales taxes to “any goods and services” so long as they say the move is for the purpose of reducing and eliminating the income tax.

And yet the House, on the same day, added another favored category to the list of transactions spared from the sales tax, exempting purchases by contractors and subcontractors for certain public improvements that will be owned by the government.

No sneer intended here. Every exemption has a rationale and a local constituency attached to it. But exemptions are not free. They narrow the base of the very tax lawmakers now say must do more of the heavy lifting.

That is the larger Missouri pattern. Lawmakers sound alarms about budget stress — Medicaid, education, prisons, roads, child care and every other claim on the public purse. Then, in the next breath, they pass tax cuts, expand exemptions or create new obligations.

Sit through a budget hearing this year and you’ll hear lawmakers trying to figure out ways to avoid massive cuts to a litany of programs, most notably those benefiting the disabled or foster kids. Take the elevator three floors up, and lawmakers fast-tracked a bill to the governor’s desk that could require construction of a new prison costing nearly $1 billion.

The statehouse is full of lawmakers who speak sincerely about discipline. It’s just that the discipline is almost always assigned to someone else’s priority. Austerity is forever being directed toward another committee, another constituency or another line item. One member’s bloated indulgence is another’s essential commitment back home.

The real issue is not whether Missouri should prefer sales taxes to income taxes. That is a legitimate argument. It’s whether the legislature is willing to describe the exchange honestly.

At some point, what looks like tax policy starts to resemble magical thinking.

And magical thinking, unlike the income tax, never seems to be in danger of repeal.

Missouri Independent is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Missouri Independent maintains editorial independence. Contact Editor Jason Hancock for questions: info@missouriindependent.com.