Consumption Tax Petition Talking Points
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Consumption Tax Petition Talking Points
The Consumption Tax petitions, sometimes referred to as the Everything Tax, Mega-Tax or Fair Tax, have begun to circulate across the state of Missouri. The current petitions are intended to constitutionally change the way state revenue is generated. The current income tax structure would be fazed out and replaced with a sales tax on both goods and services. There are currently issues with these petitions that Missouri PTA believes would cause harm to the welfare of children.
Click here to view Missouri PTA's position statement pertaining to the consumption tax initiatives.
- Missouri’s state constitution (article IV section 24) requires the executive branch to create an annual budget where the expenditures meet the projected revenue. If expenditures exceed revenue, the executive branch is charged with the task of recommending any laws necessary to meet expenditures. This is sometimes referred to as a balanced budget. If revenue decreases, budget expenditures – services – will be decreased.
- The petitions do not propose that this tax will raise equivalent money for the state. If the tax generates less revenue that the state currently collects under the income tax structure there is no mechanism or plan to allow for adjustments. Remember this would be a change to our state constitution. Amendments to the constitution are not easy to make.
- Income tax revenue generating structures are based on a progressive model. This type of model is intended to protect the middle and low-income individuals. A consumption tax that taxes basic needs, would disproportionally and adversely affect middle and low-income families.
- Missouri ranks 27th lowest in individual income tax at $822 per capita compared to the national average of $1,003.
- These petitions would cap the total amount taxed on goods and services at 7%. Local municipalities would be capped at 3%; the remaining 5% would replace the current state income tax. Any local municipality that currently brings in more than 3% in sales tax would be required to decrease that rate to the 3%. This would, in turn, result in a decrease of revenue to pay for services at the local level.
- Taking into account current sales rates and projected income from goods and services not currently taxed, the projected budget shortfall is estimated at over $2 billion dollars.
- Over the past 5 years Missouri has seen a decrease in sales tax revenue. In 2007, Missouri ranked 40th lowest for general sales revenue. Missouri averages $557 per capita compared to the national average of $891.
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