State tax cuts are important for economic growth

Sunday, August 4, 2013

Missourians should pay little tax because they have little government and see no need for more. Government has an insatiable appetite for money. You've got it; they want it.

As the vice chairman of the Senate Ways & Means Committee, I have been through many hearings about our tax laws and have researched the issue extensively. For more than 90 years, no meaningful tax relief has made it into law. This is why one of the most important pieces of legislation I voted for this year was HB 253, the comprehensive tax reform bill. Rather than trying to drain every cent from Missouri taxpayers, government should instead try to drain every cent of waste from the state budget.

The best place to combine fiscal rectitude and pro-growth economics is the tax code. Since 2008, our state has lost more than 24,000 jobs. As of June, more than 206,000 Missourians were unemployed. We must reverse this trend, and across-the-board tax relief is the best way to do so. The evidence supports the economic principle that lower tax rates are associated with long-term, rapid growth of the economy -- both during normal periods and during recovery from a recessionary condition. Pro-growth policies, such as cutting income taxes, work.

Oklahoma has provided a valuable lesson about tax cuts. They proved when you cut taxes, revenue grows. Since the state personal income tax cuts began in FY-2005, both income tax collections and sales-tax collections increased. Once again, basic economic theory tells us a permanent tax cut will lead to an increase in consupmption. This was witnessed by Oklahoma over the past eight years.

History demonstrates the best fiscal policy is an across-the-board tax cut approach where both employers and employees benefit. Businesses that are moving from high tax states are moving to Arizona, Colorado, Florida, Nevada, Texas and Utah -- all of which boast low or no state income taxes and lower business taxes. These states are quickly becoming magnets for business development. We need to put Missouri on this list. Missouri is 48th in economic growth over the last decade. Where we are is totally unacceptable.

We need to study the states that work, know why they work, and take the ways that work and apply them in Missouri. Or, we could wait until the disadvantages of operating a business in Missouri become too great.

The governor is playing politics with the budget, withholding $400 million -- including $66 million from K-12 education -- despite the fact Missouri has a $325 million budget surplus. I support education funding. That is why I voted to increase the K-12 education foundation formula by $66 million, increase higher education funding by $25 million, and increase funding for scholarship programs. I support education funding and will continue to vote for increases for our children. However, let me make it clear the legislative body sets the budget for education -- not the governor.

Tax cuts enhance incentives for work effort, savings and investment. It is no accident that reducing taxes spurs economic growth, investment, productivity and employment growth. We need to make Missouri's tax system more pro-growth. Missourians believe returning money to taxpayers when there are surpluses is a good idea. I hope legislators have the political fortitude to support sensible policies like lessening the tax burden and override the governor's veto.

Wayne Wallingford, R-Cape Girardeau, is the state senator for Missouri's 27th District.

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