This article first appeared in the St. Louis Beacon, Nov. 29, 2011 - Let Voters Decide, the chief campaign group for the effort to replace Missouri's income tax with a sales tax, dropped its suit today challenging the state's cost estimates for two versions of the group's proposed initiative-petition wordings.
The suit was withdrawn because the group on Monday withdrew those two versions, leaving two remaining approved versions that can be circulated to get on the 2012 ballot. The group already has begun collecting signatures on one of them.
The group's lawyer, Marc Ellinger, filed withdrawal letters Monday with the secretary of state's office for petition versions 10 and 11 -- about six weeks before the scheduled Jan. 6 trial on those versions, prompted by a lawsuit filed by an opposing group, Missourians for Fair Taxation.
Earlier this fall, Let Voters Decide withdrew versions 1-9.
Ellinger said in an interview that today's court action dropping the suit means that versions 10 and 11 are dead.
The latest withdrawals leave Let Voters Decide with two versions approved by the secretary of state's office for circulation. Those two versions, 12 and 13, also are subjects of a lawsuit, although no trial date has been set.
Let Voters Decide has until May 6 to submit petitions that have been signed by minimums of 147,000 to almost 160,000 registered voters. The signatures have to be collected from at least six of the state's nine congressional districts. The number of signatures depends on which six districts are selected.
Ellinger said that Let Voters Decide had begun collecting signatures in southwest Missouri on Version 13. However, a firm decision has yet to be reached on whether to stick with that version or shift to Version 12, he said.
The chief difference is that Version 13 also contains an unrelated provision regarding property taxes for the elderly, Ellinger said. Version 12 sticks solely with matters related to eliminating the state income tax and replacing it with a larger sales tax.
Let Voters Decide is bankrolled primarily by wealthy financier Rex Sinquefield, who contends that a broader sales tax is fairer than a state income tax and will encourage more economic development.
The opposition includes two organizations -- Missourians for Fair Taxation, set up by the real estate industry, and the Coalition for Missouri's Future, which includes education groups. The groups have dubbed the proposed higher sales tax the "Almost Everything Tax." (Initially, the critics had called it the "Everything Tax.")
Both sides are circulating analyses by dueling economic experts.
Scott Charton, a spokesman for Missourians for Fair Taxation, contended that any of the versions of the tax shift "would devastate Missouri's economy while nearly doubling the state sales tax on most goods, expanding the sales tax to other goods and services and more than quadrupling the state sales tax on groceries."
Charton also asserted that Let Voters Decide should be upfront by "honestly disclosing on their website the text of the version of the 'Almost Everything Tax' they've been circulating for voter signatures for weeks."
Version 13and Version 12 call for phasing out Missouri's income tax, now generally 6 percent, by January 2016. The replacement tax would be a sales tax of no more than 7 percent statewide, and no more than 10 percent including any local or regional sales taxes.
Backers say the sales tax will ignite more economic activity, which in turn would produce more tax revenue for the state.
Let Voters Decide and its allied economist, Arthur Laffer, contend that economic performance has been stronger in states without an income tax, including Vermont, Tennessee and Florida.
Laffer also backs the idea of taxing spending, not income.
Critics say the larger sales tax is unfair to lower-income Missourians and also will dramatically cut the state's overall income -- forcing more cuts in state services. They are circulating disparaging analysis by former state budget director James Moody, who compiled the estimates of severe loss in state income and the higher sales taxes paid by those with lower incomes.
Laffer noted in a recent interview with the Beacon that Missouri already levies some sort of income tax on anyone who earns at least $100. The state's income tax rate begins at 2 percent and increases to 6 percent for all income above 6 percent a year. His point, he said, is that "the income tax here is not just on rich people."
Let Voters Decide has filed a suit challenging state Auditor Tom Schweich's official "fiscal note'' for the remaining two versions and the two that were withdrawn. The auditor's office estimates that the shift from an income tax to a sales tax could reduce state revenue by as much as $1.3 billion a year, or result in an increase of up to $300 million a year.
The auditor also estimates that Version 13, for example, would increase state government operating costs by up to $12.9 million a year, primarily to hire more people in the state Office of Administration and the Department of Revenue. Let Voters Decide disputes that estimate.
Version 13 and Version 12 have a long list of items, sales or services that would be exempted from the sales tax. Critics contend that the exemptions would cost the state even more in revenue.
But Version 13 also would set up a "homestead'' provision aimed at protecting elderly homeowners who earn less than $75,000 from sharply increased property taxes, should real estate stabilize. Ellinger said that the provision would exempt the elderly from any property tax hikes for one year, should their property values shoot up.
The protection would apply only to homes worth less than $400,000, he said.
