There are few areas of policy where lawmakers’ shortsightedness is on display as fully as it is with the gasoline tax.  Now, with a series of twenty six new charts from the Institute on Taxation and Economic Policy ( ITEP), you can see the impact of that shortsightedness in most states as shareable graphs.

Overall, state gas taxes are at historic lows, adjusted for inflation, and most states can expect further declines in the years ahead if lawmakers do not act.  Some states, including New Jersey, Iowa, Utah, Alabama, and Alaska, are levying their gas taxes at lower rates than at any time in their history.  Other states like Maryland, Oklahoma, Massachusetts, Missouri, Tennessee, Arkansas, and Wyoming will approach or surpass historic lows in the near future if their gas tax rates remain unchanged and inflation continues as expected.

These findings build on a 50-state report from ITEP released last month, called Building a Better Gas Tax.  ITEP found that 36 states levy a “fixed-rate” gas tax totally unprepared for the inevitable impact of inflation, and twenty two of those states have gone fifteen years or more without raising their gas taxes.  All told, the states are losing over $10 billion in transportation revenue each year that would have been collected if lawmakers had simply planned for inflation the last time they raised their state gas tax rates.

View the charts here, and read Building a Better Gas Tax here.

Note for policy wonks: Charts were only made in twenty six states because the other twenty four do not publish sufficient historical data on their gas tax rates.  It’s also worth noting that these charts aren’t perfectly apples-to-apples with the Building a Better Gas Tax report, because that report examined the effect of construction cost inflation, whereas these charts had to rely on the general inflation rate (CPI) because most construction cost data only goes back to the 1970’s.  Even with that caveat in mind, these charts provide an important long-term look at state gas taxes, and yet another way of analyzing the same glaring problem.

Example:

Note to Readers: Over the coming weeks, ITEP will highlight tax policy proposals that are gaining momentum in states across the country. This week, we’re taking a closer look at proposals which would lessen a state’s reliance on progressive income taxes, often by shifting to a heavier reliance on regressive sales taxes. 

Georgia – A legislative proposal gaining traction in Atlanta would undercut the state’s reliance on the personal income tax – its only major progressive revenue source.  It would make up those revenues by raising the sales tax – every state’s most regressive source of revenue.  The plan also includes two other components that hit the poorest Georgians the hardest: taxing groceries and adding a dollar to the cigarette tax.  A sensible, comprehensive proposal from the Georgia Budget and Policy Institute is the template lawmakers should be following. It starts with fairness, ends with increased revenues and is all about modernization and reform. 

Kansas – If the expectations about Governor Sam Brownback’s proposed income tax changes are right, Kansas could have a hard time balancing its books. Tonight, the Governor, (who has received technical assistance from supply side guru Arthur Laffer), is expected to propose drastic reductions to state income tax rates.  Details on how the governor plans to make up the lost revenue haven’t been revealed, but his sidekick Laffer was recently quoted as saying, “It’s a revolution in a cornfield. Brownback and his whole group there, it’s an amazing thing they’re doing. Truly revolutionary.”

Kentucky –  Fresh off his reelection to the Governor’s office, Steve Beshear is expected to propose his own tax reform plan, but Representative Bill Farmer, who’s been itching to change Kentucky’s tax code for years, has already pre-filed his own tax overhaul bill, which would slash the state income tax, expand the sales tax base to include more services and lower the sales tax rate.  ITEP conducted an in depth analysis of an earlier Farmer proposal and found that his proposal would cost the state hundreds of millions of dollars and raise taxes on the poorest 20 percent of Kentuckians by an average of $138. We expect that his current proposal won’t do much to fix the state’s regressive tax structure either.

Missouri – Perhaps the most destructive proposal of this type gaining traction is Missouri’s mega-tax proposal, so called because it amounts to a massive consumption tax hike for ordinary Missourians. Proponents of the related ballot initiative that would eliminate the state’s personal income tax and replace that revenue by adding goods and services to the sales tax base are currently collecting signatures in an attempt to place the initiative on the ballot this November. Show-Me-Staters would be unwise to provide their signatures for this kind of campaign, however, because its passage would result in higher overall taxes for working families. Click here to see ITEP testimony on a similar proposal.

Oklahoma – Two seriously bad proposals that would increase the unfairness of Oklahoma’s tax system are currently under consideration. Working with (the aforementioned supply side guru) Arthur Laffer, the free-market Oklahoma Council of Public Affairs is proposing to eliminate the state income tax altogether. An ITEP analysis found that the bottom one-fifth of Oklahoma taxpayers -- those earning less than $16,600 per year -- would be paying on average $250 a year more in taxes, or about 2.5 percent more of their income. Similarly, the Tax Force on Comprehensive Tax Reform (dominated by business interests) suggests lowering the state’s top income tax rate and eliminating a variety of tax credits, many of which are designed to help low and middle income families. David Blatt, director of the non partisan Oklahoma Policy Institute recently said of the proposal, "This would hit hardest the poor and middle class families who are struggling most to make ends meet in a tough economy.”

Photo of Governor Steve Beshear via  Gage Skidmore and photo of Art Laffer via Republican Conference Creative Commons Attribution License 2.0

Naughty

Michigan’s legislature and Governor Snyder top the naughty list by giving away more than $1.6 billion in tax cuts for business and paying for it with tax increases on low-and middle-income working and retired families.

Florida continued to dole out more corporate pork this year, including a property tax break that happens to benefit huge commercial land owners, like Disney World and Florida Power and Light, and other corporations (that also happen to be major donors to the state’s Republican governor and legislative majority party).

Minnesota’s legislature missed an opportunity to do the right thing when it rejected a tax increase on the state’s wealthiest residents. The plan was proposed by Governor Dayton and supported by 63 percent of Minnesotans over the alternative, which was cuts to spending on education, health care and other vital public services.

Anti-tax activists in Missouri were hard at work again. This year they were collecting signatures for a ballot initiative that would eliminate the state’s personal income tax and replace it with a broadened and increased sales tax.

Nice

Connecticut’s Governor Malloy and the legislature adopted a $1.4 billion tax increase that improved tax fairness in the state and protected public investments like education and health care.  Most notably, the state added an Earned Income Tax Credit, a significant tax break for low-income working families.

District of Columbia lawmakers greatly reduced the ability of corporations to dodge their fair share of taxes by adopting combined reporting (which makes it harder to hide profits in other states) and a higher corporate minimum tax. The Council also temporarily increased taxes for individuals making more than $350,000 a year and limited itemized deductions, which are most often taken by high income filers.

Hawaii lawmakers also limited upside-down tax giveaways (itemized deductions) for their state’s richest residents and passed other tax changes to raise much needed revenue.

A Little Bit Naughty and Nice

New York’s Governor Andrew Cuomo reversed his campaign vow not to raise taxes and supported a tax increase on residents earning more than $2 million a year.   The plan, passed by the legislature, also included a tax break for those with income under $300,000.

However, New York lawmakers passed the governor’s cap on property taxes this summer, which is predictably creating crises and forcing dramatic cuts in local education, medical, and public safety services.

Illinois raised significant revenue earlier in the year through temporary personal and corporate income tax rate increases, all designed to stave off harsh spending cuts, but then turned right around and gave away hundreds of millions of dollars to Sears and CME, allegedly to keep them in the state.

The St. Louis Post Dispatch calls Missouri’s special legislative session that just wrapped up a fiasco. We’ve written about this saga of a special session that started September 6 and was convened with the promise of helping spur the Show Me State’s economy.  But from the Governor’s misguided  support for eliminating a credit that keeps seniors and the disabled in their homes, to the debacle of a plan to make the St. Louis airport a futuristic hub for freight between China and the Midwest, this special session was doomed by a growing skepticism among the state’s lawmakers that tax giveaways for businesses will help grow the state’s languishing economy. Sensibly, many lawmakers refused to accept new tax breaks unless procedures (such as sunsets) were put in place to make sure these tax breaks actually work.

Despite having clear majorities in the Senate (26-8) and House (105-54), the state's Republican lawmakers weren't able to get much done, and it’s one of those times that stalemate was actually a good thing. 

Photo of Missouri Capitol via David Shane Creative Commons Attribution License 2.0

In the past year, Missouri lawmakers have grown increasingly skeptical about the effectiveness of business tax breaks in encouraging economic development. But the bad news is that during an ongoing special legislative session, some lawmakers have been eager to enact massive new tax breaks for a proposed cargo hub, optimistically dubbed “Aerotropolis,” to be located at the St. Louis airport, which is meant to lure overseas cargo shippers to Missouri.

With no apparent irony, some lawmakers want to use the revenues from repealing existing ineffective tax subsidies to pay for the proposed new “Aerotropolis” package. Fortunately, the same lawmakers who have voiced their opposition to existing subsidies are building a critical mass of skepticism about the new proposal. As Senator Jason Crowell put it, "We've come to a pretty firm conclusion, I believe, that the Missouri Senate will partner with you to create jobs. It will not partner with you to subsidize activity that may or may not create jobs."

It’s looking like some scaled down version of the original package is what will pass this month’s special session.

One other promising development: so far, the circuit breaker that protects low income and senior renters has survived, and efforts to repurpose that modest program’s costs for more business tax breaks have so far failed.

Photo via AFL CIO Creative Commons Attribution License 2.0

A recent Kansas City Star editorial, “ KC’s taxes especially burdensome for the poor” argues for reforming that city’s tax structure. The article cites Tax Rates and Tax Burdens in the District of Columbia – A Nationwide Comparison put out by the D.C. government. This annual study takes a close look at the major taxes levied by large cities and, by creating hypothetical profiles of different kinds of households, it ranks their impact on individual family types with variations for income, filing status, available deductions, etc.

Kansas City, Missouri doesn’t fare very well in the report. In fact, the city’s tax structure asks low-income residents to pay more than their fair share. Kansas City does have a recently reinvigorated Citizens Commission on Municipal Revenue tasked with improving the city’s “financial problems and [to] ensure continuing city growth.” The findings of the D.C. report should play a large role in informing the Commission and improving the city’s tax structure.

The Kansas City Star should be commended for opining that, “the commission needs to focus on the already high tax burden on Kansas Citians — particularly on low-income residents.”

While Citizens for Tax Justice works largely on federal tax issues, and its partner, the Institute on Taxation and Economic Policy,  focuses on state tax systems, D.C.’s annual report on tax rates and burdens reminds us that there is important work to be done improving the tax structures of cities' too. 

For detailed profiles of state tax systems – which  are notoriously regressive and take more money, as a percentage of income, from the least well off families compared to the wealthiest – you can look at ITEP’s Who Pays? A Distributional Analysis of the Tax Systems in All 50 States.

Photo via Jimmy Wayne Creative Commons Attribution License 2.0

The St. Louis Post Dispatch gets it all wrong when they title a recent article: “Jobs incentives in peril as special legislative session begins in Missouri.” True, Missouri’s special session started this week and, along with moving the date of the presidential primary and repealing a new law regarding teachers and students on Facebook, taxes are on the table.

But the tax incentives supposed to spur employment and economic development aren’t in any real peril. The state of Missouri seems to be chugging along without these controversial incentives, one of which would cost the state $360 million in an attempt to make the St. Louis airport a hub for freight between China and the Midwest.

No, the state’s property tax credit, designed to specifically help low income renters who are seniors and/or disabled, is the program in real peril. Some in the legislature and now Governor Nixon are proposing to eliminate this credit entirely.  The revenue gain from eliminating the property tax credit for these renters is $57 million, by far the largest cut proposed in the legislation.  

Last year, Nixon’s Missouri Tax Credit Review Commission proposed eliminating the credit, saying the credit "doesn't really do anything.”  But tell that to a woman who’d been trying to prepare her meals on a camp stove.  Brenda Procter, a University of Missouri extension specialist in personal finance, tells of informing this client she could expect a $600 credit and “she almost crushed me with a hug. She said, Oh, my God, I can buy a stove.”

Yes, this is the program where lawmakers decided to go looking for big revenue savings while simultaneously pursuing dubious tax incentives to make St. Louis some kind of “aerotropolis.”

There is some evidence the sponsor of the repeal bill might be rethinking complete elimination of the credit, however.  Senator Chuck Purgason recently said: "Republicans are always portrayed as taking from the poor and giving to the rich, and we didn't want to do that.”

Let’s hope Missouri Republicans and the legislature as a whole defy that stereotype and do right by the state’s most vulnerable citizens.

Photo via Missouri News Horizon Creative Commons Attribution License 2.0

Anti-tax lawmakers and activists in Kansas and Missouri continue to promote ideas to repeal their state income taxes and replace some of the revenue with a huge consumption tax. As ITEP’s Meg Wiehe explained in a recent Kansas City Star article, “A lot of education needs to happen around this issue. If you move to a consumption-based tax, the vast majority of taxpayers would likely pay more in taxes than they are under the income tax, except for the wealthiest.”

ITEP’s written testimony on one such proposal in Missouri  explains that only the richest 5 percent of Missourians would see a tax cut if the state’s personal income tax was replaced with a broad based sales tax, leaving the other 95 percent to pay higher taxes.

The corporate-controlled, anti-government American Legislative Exchange Council (ALEC) says approvingly that “Kansas and Missouri are at the top of the list” of states considering such proposals. To ALEC, ITEP’s estimates aren’t devastating at all. They recently claimed that “the downside of the tax swap appears to be minimal, if not non-existent.”

As a recent Kansas City Star editorial, warns, “The blessing of the council, known as ALEC, raises a red flag.”

In Kansas, Governor Sam Brownback has long been a proponent of eliminating, or at the very least, drastically reducing the state’s income tax. The Governor’s budget director anticipates that his budget for the new fiscal year will show “some significant (income tax) cuts”.

Missouri lawmakers have tried for the past couple of years to pass legislation that would eliminate the income tax entirely, but the legislation has not successfully passed both houses of the legislature.

Since cooler heads prevailed in the legislature, mega-rich troublemaker Rex Sinquefield has filed 11 ballot initiatives with the Secretary of State’s office that all do basically the same thing — eliminate state income taxes and replace the revenue with a broader sales tax. 

It’s expected that Sinquefield will eventually fund signature-collection for one of these ballot questions. If enough signatures are gathered, Missouri voters would likely be asked to decide about this radical shift in November 2012.

The proposals in Kansas and Missouri threaten those states’ ability to provide core and critical services because they would result in permanently lower revenue, while also tilting each state’s tax system even more heavily in favor of the well-off.

Photos via KDOTHQ Creative Commons Attribution License 2.0

In September, Missouri lawmakers are expected to reconvene for a special session aimed at passing a jobs creation package to promote economic development. Legislation that increases corporate tax exemptions and general business incentives, though deeply flawed as policy, isn’t a novel concept.  Yet, leaders in Jefferson City are expected to do more than simply give money to corporations: lawmakers are actually planning to pay for these giveaways by revoking property tax credits for elderly and disabled renters.

The Associated Press reports that the legislation “would authorize tax breaks to attract international shippers to Lambert-St. Louis International Airport.... It also would create incentives for science and technology companies, computer-based data storage centers and big-time amateur sporting events. And it would revamp existing programs so Missouri could offer incentives to retain companies being enticed by other states – a provision particularly intended counteract Kansas' efforts to lure companies from Kansas City, Mo.”

Of course, there is little evidence that these giveaways will actually produce jobs for Missourians, or expedite business decisions to expand in the Show Me State.

But, it’s been demonstrated repeatedly that programs like low income property tax circuit breakers, which mitigate the cost of property taxes, do produce results – and make an enormous difference in the budgets of low income folks.

Missouri lawmakers should take a serious step back and reexamine their intentions.  Taking property tax credits away from elderly renters to pay for dubious breaks for corporations isn’t a legacy lawmakers can feel proud of.

Photo via Tim 7423 Creative Commons Attribution License 2.0

In Missouri and Minnesota, property tax “circuit breakers” ensure that property taxes do not take more than a limited percentage of income from taxpayers of modest means. As ITEP has explained, it is widely accepted that property taxes are passed on by landlords to renters in the form of higher rents, which is why these circuit breakers are usually available to renters, as well as homeowners. However, lawmakers in these two states have tried to change that.

Effort to Take Credit from Renters Fails in Missouri

In Missouri, a victory for tax fairness came in the form of inaction. The Missouri legislature ended its session on May 13th without passing legislation that would have eliminated the property tax credit for renters. Making the property tax “circuit breaker” unavailable for renters would have left thousands of low-income families and individuals unable to claim the credit.

The measure would have cut off $57 million in critical tax relief for individuals making less than $27,500 a year, in the name of budget austerity.

Supporters of the circuit breaker tax credit questioned the legislature’s priorities, as it sought to end this benefit for low-income individuals while showering a single air freight facility with as much as $33.4 million annually in tax credits.

New Proposal in Minnesota

Even as a temporary victory was won in Missouri, the Minnesota’s legislative tax conference committee is proposing to cut the state’s renter’s credit by a proposed $186 million next year.

According to the Minnesota Budget Project, under the proposal, seniors and people with disabilities would face an average reduction in their credit of $190, while all other families would face an average reduction of $335. In fact, about 72,500 households would lose their refund entirely.

The move to eliminate the renter’s credit will be especially harmful in Minnesota, which already ranks dead last in rental affordability among low-wage workers.

Circuit breaker property tax credits are one of the most effective ways to use the tax system to reduce poverty. During a recession, states should be considering ways to enact or expand these credits, rather than scaling them back.

Earlier this week, Missouri Governor Jay Nixon signed into law legislation that will gradually phase out the state’s corporate franchise tax.

The tax is levied on either the total assets of a company or the value of its paid up capital stock, and it generated about $88 million in needed revenue in 2010. 

In 2009 the legislature took steps to make sure that small businesses wouldn't be affected by the tax, exempting any firm with assets under $10 million. This means that the principal beneficiaries of this year's repeal legislation will be the very biggest corporations.

The Missouri Budget Project responded to the franchise tax news, saying "it's extremely disappointing that the state would eliminate a source of revenue while facing a general revenue shortfall approaching $700 million.”

The elimination of the corporate franchise tax puts enormous pressure on the state’s only other major tax on corporations — the corporate income tax. Sadly, the corporate income tax isn’t very robust either. Compared to other state corporate income taxes, Missouri's is already the lowest in the country as a share of gross state product.

Because there is no public disclosure of Missouri corporate income tax payments, it's impossible to know how specific companies are using loopholes to avoid the Missouri tax. But the tax information in some companies' public filings makes it obvious that they are successfully avoiding state taxes generally.

For example, Missouri-based Monsanto is paying less than zero dollars in state corporate income taxes nationwide. In 2010, when Monsanto reported $1.2 billion in pretax U.S. profits, it says it received a nationwide state income tax rebate of $1 million. These figures beg questions about the effectiveness of state taxes on corporations, particularly in Missouri, where Monsanto is based.

With the demise of Missouri's franchise tax, these questions should become even more urgent for Missouri policymakers who care about a fair and sustainable revenue stream.

In news that will warm the hearts of tax justice advocates across the country, Missouri voters in Kansas City and St. Louis overwhelmingly approved ballot initiatives to keep their 1 percent local earnings taxes.

This is a huge blow to wealthy campaign financier Rex Sinquefield, who bankrolled the campaign against these taxes. The St. Louis earnings tax passed with 88 percent of the vote and Kansas City voters approved the tax by a 3-to-1 margin. It’s not every day folks so clearly come out and voice their support for taxes and the vital services they fund.

Mayors of both cities appeared to be gleeful following the election results. St. Louis Mayor Francis Slay said, "I was confident that the people of St. Louis would do the right thing for the future of the city if they were armed with the facts. Regardless of what anyone thought of the earnings tax, it would have been irresponsible to get rid of it without a viable alternative to replace it."

Kansas City, Mayor-elect Sly James said, "It means that this city is going to continue to try and become as efficient as possible, but we're not going to have to do it with one hand tied behind our backs.”

Elected officials in California and Florida face unprecedented fiscal challenges at both the state and local levels. Yet rather than working to reduce their budget shortfalls, policymakers in each state are doing their best to dig their budget holes deeper by offering new company-specific tax breaks to keep footloose corporations from moving their operations elsewhere.

A front-page article in today's New York Times offers some insights into this seemingly irrational behavior. Focusing on the battle between Kansas and Missouri lawmakers over the future headquarters of movie-theater chain AMC Entertainment, the article describes a system of extorting tax breaks that is viewed by everyone involved — from lawmakers to the beneficiaries of the tax breaks — as a pointless zero-sum game.

AMC's chief executive officer, poised to receive lavish tax handouts from the two states, wonders aloud "whether this is an appropriate role for government to be playing," and a lawyer whose job involves seeking out tax breaks for corporate clients describes it as "horrible public policy."

This situation won't be news to anyone who's followed the work of Greg LeRoy and the folks at Good Jobs First over the years. LeRoy's "Great American Jobs Scam" provides an excellent summary of the cottage industry of site location consultants that has emerged to facilitate the "economic war between the states" that the Times article describes. But the battle over AMC is only one example of egregious tax giveaways from the past week.

In Florida, Darden Restaurants (parent company of the Red Lobster and Olive Garden restaurant franchises) is pushing for new tax breaks. The Orlando Sentinel reports that this Fortune 500 company, which generated $7.1 billion in global sales during its most recent fiscal year, is pushing for legislation that would allow the millions in corporate income tax credits it already receives in Florida to be applied to its sales tax liability. This would save the company as much as $5 million.

Fortunately, the tax legislation has stalled as its key sponsor, Republican State Representative Chris Dorworth, read the ‘revelation’ in the Orlando Sentinel that his own tax break legislation would only apply to Darden Restaurants. He then decided he could not support his own legislation as written.  

Meanwhile, San-Franciso-based Twitter has played tax break hardball with city officials for months, threatening to move to Brisbane if it does not receive substantial tax breaks. Despite facing a tough $350 million deficit and dramatic cuts to health services, the San Francisco Board of Supervisors capitulated to Twitter’s demands this week, passing a $22 million payroll tax break for the company on Tuesday. Roxanne Sanchez, the president of Service Employees International Union Local 1021, opposed the measure, saying, “It’s a taxpayer handout to a $10 billion company at a time we’re cutting basic city services.”

As today's Times article reminds us, corporate tax breaks all too often create benefits for one jurisdiction at the direct expense of another, with no net benefit for the US economy overall. And tax breaks targeted to a specific company set an especially dangerous precedent. As an editorial in the San Francisco Guardian put it, “once you go down the path of caving in to corporate blackmail, it never ends.”

Earlier this week, the Institute on Taxation and Economic Policy released a new report, Topsy-Turvy: State Income Tax Deductions for Federal Income Taxes Turn Tax Fairness on its Head.  The report highlights an unusual tax break that currently exists in only six states (Alabama, Iowa, Louisiana, Missouri, Montana, and Oregon): a state income tax deduction for federal income tax payments.  Collectively these states stand to lose over $2.5 billion in tax revenues in 2011 due to these tax breaks, with losses ranging from $45 million to $643 million per state.

Unfortunately, the high price tag of this tax giveaway yields remarkably little benefit to low-and middle-income families.  In states where the deduction is uncapped, the best off 1 percent of taxpayers enjoy up to one-third of the benefits from this provision, while the top 20 percent enjoy up to 80 percent of the benefits.  Wisely, several states have eliminated or scaled back this expensive and poorly targeted deduction in the last few years.  North Dakota, Oklahoma, and Utah have all eliminated the deduction, and Oregon lawmakers voted recently to further limit their deduction.

Deductions for federal income taxes seriously undermine the adequacy and fairness of state income taxes. These deductions also leave state budgets vulnerable to changes in federal tax law.  As the recession lingers and states look to enhance their long term fiscal solvency, elected officials in states with a deduction for federal income taxes paid have a real opportunity to close fiscal shortfalls in a way that has minimal impact on low-and middle-income families.

Read the Report

There’s a lot happening lately in the world of tax justice (or injustice as the case may be) in Missouri. Here’s a quick roundup:

The Good: Anti-Poverty Tax Policy

This week a bill to introduce a 20 percent refundable Earned Income Tax Credit (EITC) was heard before the House Committee on Tax Reform.  Representative Jeanette Mott Oxford and her thirty-five cosponsors should be congratulated for presenting this bill. 

ITEP’s written testimony on behalf of the bill made it clear that “eighty percent of the benefits would go to the poorest forty percent of Missourians — exactly the income groups who pay the largest share of their income in Missouri taxes under current law.”

In their testimony, the Missouri Budget Project said, “A state EITC could benefit as many as 440,000 Missouri families and is also proven to be a valuable economic stimulus, generating economic activity that would reach every corner of Missouri.”

State tax structures illustrate state priorities. If Missouri's legislators prioritize generating economic activity and making the tax system fair for working families, they should pass HB581.

The Bad: Ballot Measures to Starve Local Governments

Early next month voters in Kansas City and St. Louis will be asked to decide if their cities should continue to have an earnings tax. If the voters in Kansas City reject their 1 percent tax on earnings levied on those who live or work in Kansas City, the city will lose approximately $200 million a year by the time the earnings tax is fully repealed, a staggering 40 percent of the city’s general fund revenue.

Last year, Missouri voters approved a law that bars Kansas City and St. Louis from continuing to have these earnings taxes unless they are approved by the cities' voters. (The measure also blocked other local governments from adopting an earnings tax.) The ballot measure was largely bankrolled by Rex Sinquefield, an ideological, wealthy financier known for supporting conservative causes.

Now, the groups battling for and against these major city revenue sources are entering the final push. The Kansas City Star recently explained that the anti-earnings tax folks aren’t being honest. “Earnings tax opponents continue to highlight this statement on their website: 'Cutting the e-tax would only require an annual 1.5 percent cut out of the budget over the next 10 years.' We’ve been over this before, but it bears repeating: This statement is misleading and, worse, the critics know it but refuse to acknowledge the truth.”

The Ugly: Income Tax Repeal

In even worse news, Missouri’s Mega Tax Bill, HJR 8, passed both the House Tax Reform and Rules Committees and is expected to be debated on the floor of the House any day. The legislation would create a constitutional amendment to eliminate the state’s individual and corporate income taxes as well as corporation and bank franchise taxes, and replace the revenue with an expanded sales tax.

There are currently nine ballot initiatives that, if enacted, would make a similar radical change to the state’s tax structure. In a previous analysis of similar legislation, ITEP found that the bottom 95 percent of the income distribution would see a tax hike if the Mega Tax Bill were to become law, while the richest five percent would see tax cuts. It's hard to get any uglier than that.