The Mo Tax Reform will be revenue neutral. The Show Me Institute has made projections of current tax collections, as well as past average annual tax collections.
We are in an economic down turn. Which means income tax collections are down. So are sales tax collections. The Fair Tax is not intended to make up any revenue shortfalls caused by the recession.
5.11% has been determined to equal current tax collections.
When the economy improves, so will sales tax collections, and so would income tax collections. The fluctuations in revenue would be neutral.
The amount you are saying, 12.5% is inaccurate. Some people have been including the current 4.225% sales tax, and in addition adding the 5.11% Fair Tax rate, plus local sales taxes, which will not change. The only amount of change in the sales tax is moving from the 4.225% to the 5.11%.
So if your current state tax rate is 4.225% and your local sales taxes, county etc are 3.75% the total you are paying now is 7.975%. The Fair tax will raise that sales tax rate .885% to 8.86% and not the 12.5% you mentioned. In your example the costs are overestimated and the revenues are underestimated.
Remember now, the sales tax we pay is taken out of what we have left on our paycheck after state income tax is taken out and then we still pay sales tax on our after tax income.
With the Fair Tax, You keep your entire check and only pay a tax when you make a purchase.
Economist Joseph Haslag, a MU Economics Professor and Executive Vice President of the Show Me Institute has completed a case study comparing neighboring 5 states and their economic growth. Missouri ranks barely above Illinois for GDP and Jobs creation but just about half the growth experienced by Arkansas. There is a completed study by Americans For Prosperity foundation WWW.AFPMO.org that breaks down income demographics. Also there is a Study compiled by the Show Me Institute www.showmeinstitute.org
that refutes the inaccurate figures quoted in your posts.
Look there and then come back and tell me how abolishing the income tax is bad.
There is no way that Missouri will meet its budget goals at a 5.11% rate. We have too many failing businesses. Furthermore, the vacancy rate of commercial property nationally will approach 18.5% this quarter. There are 800-million square feet of commercial property standing vacant throughout the country and a trip through St. Louis is enough to remind us that this recession may not be over, nor have we necessarily seen the bottom of the commercial real estate market. If more defaults occur, local governments will see shortfalls. The losses of car dealerships have completely undermined local budgets. Within 20 miles of my house, there are two empty grocery stores with 35,000 and 40,000 square feet of empty space, anchors for dying strip malls. Within two miles are two other new strip malls standing vacant. Why make a commitment to open a new store anyplace now? There are even empty Wal-Mart buildings. They relocated but nothing replaced them in the space.
The critical "if" is "when the economy improves...." There is more to making that happen than shifting the tax burden. Missouri has lost businesses to neighboring states because of its unwillingness to give them tax credits and incentives that neighbors are willing to fork over. The cost of labor, climate, and utilities also play a role. Furthermore, our cities aren't that great. The airport at St. Louis is a disaster. In spite of its turn around, the crime rate in that city is still nationally high and its school district is unaccredited, as is Kansas City's. Kansas has seen Missouri businesses move over because people want their kids out of the Kansas City school system. The business followed the employees, not the other way around. The St. Louis earnings tax is another barrier to business. If the business climate causes Missouri to continue to lose rather than increase population, there is no way that the showme numbers would work. We will just have more unemployed people left behind who can't afford to go elsewhere. And, so far, the trendline is not working in our favor.