LETTERS: LET HANCOCK DO ITS JOB

To the editor:

Let Hancock work. Missouri's elected officials are debating alternatives for cutting our taxes. How does this debate relate to Hancock?

Let's step back in time to the spring of 1993. A court ruling declared that the school foundation formula distributing state money to public schools was unconstitutional. a special Joint Education Finance Task Force was appointed to develop a proposal for submission to the General Assembly. The results of the task force's findings were included in Senate Bill 380, introduced in the spring of 1993. In order to meet the court's demand of more equitable funding to all public schools and to prevent a loss of funding to any school district, additional money to fund SB380 was passed by our General Assembly by a vote of 102-85.

Who would pay for this $315 million tax increase? Our elected officials decided that corporations and individuals remitting future income taxes should fund the increase. The corporate income tax rate was increased to 6.25 percent from 5 percent, and the amount of deduction on state corporate returns for federal incomes taxes was limited to 50 percent. Individuals were limited to a $10,000 federal tax deduction on their state returns if married filing jointly, and to $5,000 if single.

At the time of the tax increase, it was common knowledge that there was a strong possibility that this increase of revenue could, several years down the road, trigger provisions of the Hancock Amendment. The Hancock Amendment, passed in 1980, requires income-tax refunds when Missouri's revenue goes up faster than the personal income of its citizens. Remember that the SB380 tax increase was on income tax.

Now let's go forward to January 1996. The General Assembly is already aware that the constitutional revenue lid set by the Hancock Amendment will be activated for 1995. It is strong expected that the constitutional revenue lid set by the Hancock Amendment will again be activated for 1996 due to a continued healthy economy, lower unemployment and the primary source of higher revenue generated from the income-tax increases contained in SB380.

To this, add that 1996 is an election year. One begins to understand why we have seen numerous legislative proposals this session from the governor, the Senate and the House of Representatives to make significant reductions in sales taxes in various forms and degrees. They have ranged from 1/4-cent overall decrease to a 1 3/4-cent decrease on food items only to a complete elimination of sales tax on food, all to the tune of over $100 million.

Ironic, isn't it? When our government needed money in 1993, they went to the income-tax payers. When money is plentiful, they want to reduce revenue by spreading tax relief "more fairly." A sales-tax reduction would certainly be beneficial, but it should not be justified based on a temporary excess of revenue due primarily to income-tax increases. We should let Hancock work the way it was intended.

SHEELAH R. YAWITZ, President

Missouri Merchants and Manufacturers Association

Chesterfield, Mo.