It appears Republican leaders in the Missouri General Assembly will be a few votes shy in their bid to enact an income-tax cut over the veto of Gov. Jay Nixon.
That would be a good outcome. The governor’s veto should stand.
House Bill 253 has the highest profile of the more than two dozen vetoed bills the legislature could take up when it meets in its annual veto session starting Wednesday.
The stated purpose of the tax cut is creating a better business environment, as most of the benefit would be for those filing their business taxes as individuals. The cut for the average taxpayer is just a few dollars a year. To hear proponents of this measure describe it, taxes are the one and only reason a business locates in a certain community or state. But that’s not how it goes. Schools, roads, the regulatory environment and the quality of life, among others, are also key considerations.
Missouri is already a low-tax/low-service state, and this bill threatens funding across state government, and first and foremost that would mean less money coming back to our underfunded local school districts.
Here’s the catch. If the tax cut blows as a big a hole in the state’s budget as is projected, it’s not a simple matter of getting legislators to just reverse course, even if they wanted to. Under the Hancock Amendment to the state Constitution, any tax increase has to go through the voters. In other words, we have created a system under which legislators can lower, but not raise, taxes as circumstances warrant. Doing the damage is easy, but the fix is slow and cumbersome.
The bill also is poorly written. It would apply state sales taxes to prescription drugs, something legislators leaders say they didn’t intend. They say if HB 253 were enacted, they would immediately reverse that portion of it when they convene for their 2014 session in January. That’s chancy. A lot can happen – a lot can slip through the cracks, just as poor legislative homework and language slipped into this bill – between now and January. Write a clean bill, and get it right.
The governor also has laid out a scenario – with the somewhat unlikely prospect of Congress approving sales taxes on Internet purchases – in which the damage to the budget would be especially severe. The odds are against it, but prudence dictates at least taking it into account. The state has little room to be reckless. Again, doing damage is easy. Repairing it is hard.