We recently sat down with Carl Bearden, the former Speaker Pro Tem and current State Director of Americans for Prosperity. Several hours after HJR 36’s May 5 Senate Hearing, Carl gave a recap of the event as well as an update on the status of the MO Fair Tax bill:
What are the statuses of the groups testifying for and against HJR 36?
In total we had at least 40 people proponents attend the Senate hearing last week. This week, there have been 10 groups or associations that have testified against the bill, but there’s an important distinction between those for it and against the MO Fair Tax aside from their position: Almost of the folks that have testified for it were real people (individuals) or people in small businesses. We’ve had a CPA, a small services company, a retiree and a realtor testify for the bill (not organizations) – the same people that most of the opponents claim would be hurt by the proposal.
Will there be an Executive Session held for the bill?
That is still to be determined – the Senate leadership is open to having it discussed on the floor but it needs to get out of committee and fast.
One concern that some readers have voiced their opinion about is whether or not there will be enough money generated from the plan. Can you explain?
Aside from the sales tax being increased by 1.1%, the main reason there will be enough funds available is because the sales tax base would be broadened. We are not taxing the same base sales tax that is currently taken from. HJR 36 also taxes services (such as legal fees) – that is, anything that you get as individual consumer.
That’s the way it is: if you consume more, you pay more.
However, there is a rebate built in based on a families’ poverty level – families of four, for instance, would pay no sales tax if they are at a specific poverty level. The upper level incomes that tend to use more private legal services would be paying a larger amount of the sales tax.
What the bill’s opponents fail to acknowledge is not only that the sales tax base will be broadened, but that local tax rates will go down. Opponents like to add all local taxes to the proposed increased sales tax, but in order for local governments to collect the appropriate amount under the Hancock Amendment they will have to reduce their taxes (local can’t collect windfall).
What are some of the other states that have similar reforms?
States that don’t have an income tax are include Florida, Wyoming, Nevada, New Hampshire, South Dakota, Texas, Washington and Tennessee. In almost every area (population growth, economic vitality) those without an income tax are passing the states with income taxes. The most glaring and accurate comparison for Missouri is Tennessee, because the two states have more in common than other states on the list, including population and geography.
The Show-Me Institute did a study a few years back on the income tax and found that 10 years ago Missouri had a $1,000 per capita advantage over Tennessee. Now that advantage has flipped. The Show Me Institute projects the gap will continue to broaden drastically over the years.
Are there any other thoughts you would like to share?
The concept of the MO Fair Tax is exactly what needs to be – it puts the people back in charge of their taxation. They control the amount of taxes they pay by their consumption. I think it makes people be more aware of the things they buy and helps become more discriminating consumers.
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Carl keeps the AFP-MO Twitter account (@AFPMissouri) obsessively updated. To view all Tweets from the Senate Hearing today, as well as all AFP-MO updates click here.
