Americans For Prosperity-Missouri has some really informative Myth-Busters about taxation in Missouri: what hurts us now and what changes can help us grow and bring more jobs to the state.
Myth #2: Sales Taxes are More Volatile than Income Taxes
Our last myth busters explained why Professional Services, such as lobbyists, will not be taxed under the tax reform measure commonly called the “Fair Tax”. As a recap, the tax base used to calculate the tax rate DOES NOT include business to business transactions. Professional Services performed for businesses, including non-profits, would not be taxed.
The next myth buster focuses on a statement made in several meetings that sales taxes are more volatile than income taxes. When I first heard the statement I thought it was a simple misstatement. The second time I heard it, I couldn’t believe it was being made on purpose. As Ronald Reagan said, “A man is entitled to his own opinion but not his own facts.” The facts don’t support the statement.
The Office of Administration provided the last ten years of sales, income and corporate taxes. We took the data and plotted it using FY2000 as the normalized base. Here is the result.
It is pretty clear that one of the certain benefits to getting rid of income tax in Missouri is a move to a more stable source of revenue. Add to that the fact that workers will have more money in their paychecks and the state will become instantly attractive to new businesses with new jobs, and you’ve got a plan that just can’t be ignored.
