Thursday, January 21, 2010
Cutting taxes to fuel the economy is a proven economic policy. Done right, tax cuts can spur business investment and create jobs, which in turn can generate more revenue than before the tax cuts.
But when the economy is struggling and governments face huge shortfalls in revenue, cutting taxes becomes a more complex issue.
Missouri lawmakers, early on in the new session of the legislature, have offered more than 40 bills and constitutional amendments to cut taxes. While some of these cuts may be prudent and justified, many of them are efforts to gain favor with voters. Every state representative, half the state senators and the state auditor face elections this fall.
Missouri's spending plans for the current fiscal year have already been cut more than $630 million, and the state budget office says another $200 million may have to be eliminated.
Meanwhile, legislators are proposing tax cuts on guns and bullets, school bus fuel, yoga studios and storm shelters, among the many proposals so far.
Any tax reduction or elimination that can spur the state's economy should be considered, along with sensible cuts in spending. The task for legislators is figuring out which proposals fit the bill.