Saturday, February 7, 2015

Why I might support Eric Schmitt's new income cuts No. 000090

Mark Twain remarked, "There is no native American criminal class except Congress." 

Unfortunately, he never saw the Missouri Tea Party mindset GOP. If he had, he might have been the first to remark, "You can't fix stupid." Why? How else does one explain the desire of out-state Missouri GOPsters to cut income taxes they don't pay, giving new meaning to cutting off one's nose to spit one's face.

A few facts:

  1. Outstate Missouri does not pay significant amounts of state income taxes. The goose laying the golden egg is the Saint Louis region. As the Post reported last September, "The St. Louis region, [is] the economic engine of the entire state ([with]49 percent of business payroll, 51 percent of individual income taxes)." Take away Kansas City and the rest of Missouri pays very little in state income taxes.
  2. This internal balance of payments problem causes considerable economic damage to Saint Louis, lowering the number of jobs, income, and property tax values in exactly the same way as federal income taxes negatively impact Rust Belt cities like Saint Louis.
  3. Outstate Missouri benefits from this imbalance in state spending in at least three ways

  • First, through the foundation formula which results in our best school districts in Saint Louis having to self-fund while taxes from Saint Louis are diverted to outstate schools that undertax significantly.

  • Second, through state maintenance of what should be local roads under the 1952 legislation by which the Missouri Highway Department took over 12,000 miles of county highways, bringing 95 percent of all Missourians to within two miles of a hard-surfaced road.

  • Institutional location with important state institutions like the Capital, the University of Missouri, Columbia, prisons and hospitals being located outside our major metropolitan areas.

Thus, it is a stunning political feat that Saint Louis area Republicans have convinced outstate GOPSters to cut income taxes, which tax cuts will benefit Saint Louis (and Kansas City) but not outstate Missouri.

The tax cuts will not bring jobs and prosperity to outstate Missouri.

First, the amount of money is immaterial, even if the theory that tax cuts lead to economic growth were true. Witness Kansas, that is a lie, a big lie.

Second, what outstate Missouri needs is more government spending, on education and training for a service economy, not less. Bruce Greenwald explains that people cannot self-finance the transition to a high value service economy. Listening carefully to his comments about the transition to a manufacturing economy from an agricultural one during World War II, at 10:30

What the tax cuts will do for Saint Louis will be to give us breathing room to continue to self fund K-12 education. They will not lead to growth or prosperity.

Governor Jay Nixon and the the outstate Missouri K-12 education establishment understand what is at stake but clearly the vast majority of GOP senate and house members have no idea what they have done by partying and sleeping with Grover Norquist and the economic quack Art Laffer.