Senior Vice President for State Fiscal Policy
A bipartisan group of Missouri legislators this week rejected a plan to slash income taxes for the wealthy and corporations, raise sales taxes largely on middle- and low-income consumers, and cut funding for education and other services. Their vote sustained Gov. Jay Nixon’s veto of the plan, which originally passed the legislature in June.
Missouri thus joined Louisiana, Nebraska, and Oklahoma as states where high-profile tax-shifting plans, heavily promoted by anti-tax activists and organizations, failed to make it into law in 2013. Those three states have — so far — rejected the approach to taxation promoted by the American Legislative Exchange Council (ALEC), which calls for lower taxes for the wealthy, higher taxes for the poor, and less funding overall for health care, K-12 schools, higher education, public safety, and the other services that state taxes pay for.
Such tax shifts are likely to prove exceedingly damaging. Already, states like Kansas, North Carolina, and Ohio — all of which have embraced ALEC’s formula over the last two years — are cutting funding for schools, early education, and other investments in their states’ long-term ability to compete. Nor is there good reason to think those tax cuts might help their state economies; both academic research and states' own experiences over the last two decades suggest that tax cuts don't create jobs.
Advocates of this state fiscal model will likely continue to press their claims. Policymakers across the country should look to Missouri’s example when they face decisions on such misguided proposals.