When is a Tax Increase Not a Tax Increase?

Get ready for a knock-down, drag-out fight over whether to eliminate the state income tax.

In one corner is Let Voters Decide, which is circulating several variations of the Missouri Taxpayer Relief Act petition. It would replace the state income tax with higher sales taxes.

To stop the initiative, more than 30 organizations have joined the Coalition for Missouri's Future.

I wanted to know if Missouri lawmakers who signed the Taxpayer Protection Pledge put out by Americans for Tax Reform could support the initiative to eliminate the state income tax, since it is also tied to increasing state sales taxes.

Who better to ask than Grover Norquist, president of the taxpayer advocacy group?

Norquist first responded to my question with another question. He wanted to know if the proposal would cause revenue to increase.

The short answer is no. It sets a maximum level of a sales tax increase of up to 5.5 percent on food and 7 percent on other sales and services, according to the latest version approved for circulation.

Revenue would likely drop, according to estimates by Missouri Budget Director Linda Luebbering. 

Norquist said if there is no net tax hike, the pledge would not be broken.

"One can argue for reform that is also a reduction in taxes," Norquist told Missouri Journal, adding his preference is lower taxes. "But one must not twist the pledge to fit one's preferences."

The pledge is a defense against net tax hikes by the government, he said. 

Millions of dollars are likely to be spent arguing for and against the measure.

Already in the Coalition for Missouri's Future camp is Missouri Gov. Jay Nixon.

The governor, who often touts during speeches that Missouri has been able to balance its budget without raising taxes, has said he opposes a sales tax increase that would hurt seniors.

To argue in favor of the measure, Let Voters Decide brought in Arthur Laffer to Chesterfield on Wednesday. Laffer is an economist who gained prominence as a member of the Council of Economic Advisers for President Ronald Reagan. The Laffer curve is also named after the economist. 

I'm not one to quibble with a famous economist. I'm also not one to complain about paying less income taxes. However, here's the sticking point in my simple mind, which works to ferret out facts.

A tax increase is a tax increase is a tax increase.

If you want to eliminate state income taxes, find government spending you are willing to cut, instead of simply shifting the tax burden somewhere else. If you're happy with the current level of government spending, stop meddling with the tax code. Reduce it if you want. Make it simpler. That's all fine

But, don't strip away part of the tax code and replace it with even higher taxes.

By Brian R. Hook, brhook@brhook.com, (314) 482-7944

Hook is editor of Missouri Journal, which covers the economy across the Show-Me State. For more Missouri news, sign up for a newsletter and follow Missouri Journal on Twitter and Facebook.