Perspective: Gov. Nixon’s Chicken Little tax show
Sunday, April 27, 2014
Last week, the Legislature passed a historic tax relief bill that would gradually reduce the tax rate paid by every Missourian. This week — no surprise — Gov. Nixon played Chicken Little in reply, trying to scare Missourians into thinking the tax cut was something it’s not.
As I detailed here last week, “Senate Bill 509 gradually reduces the state’s top tax rate by a little more than 8 percent, and the tax rate for small business owners by 25 percent. This tax relief is phased-in with small annual reductions contingent on actual growth in state revenues. In addition, the bill adjusts our tax brackets for inflation and increases the personal exemption by $1,000 for married couples with less than $20,000 in annual income.”
On Tuesday, Gov. Nixon claimed a sentence in the bill did something other than what the Legislature has been debating for the past two years: reduce the top tax rate — not to 5.5 percent — but instead to zero.
Gov. Nixon’s Chicken Little-style interpretation is only possible if you read one sentence of the bill in complete isolation from the rest of it. But after 16 years serving as our state government’s top attorney, Gov. Nixon knows that courts don’t interpret legislative language in isolation.
Instead, it’s long settled by the Missouri Supreme Court that the “cardinal rule of statutory construction” is to determine the intent of the Legislature by looking at a statute “as a whole.” Courts must give words “a reasonable reading rather than an absurd or strained reading.” In addition, courts will not interpret some words in a statute in a way that renders other words meaningless.
Gov. Nixon’s reading of SB 509 is absurd. The first part of SB 509 enacts the tax cut through a series of modest reductions equal to only 1/60th of the total tax rate. These small reductions only occur if state general revenue grows by at least $150 million. For a court to accept Gov. Nixon’s interpretation, it would have to rule that the Legislature intended to take nibbles out of the tax rate in the first four years, and then, in year five, swallow the whole cookie in a single bite. And that the big bite on the last year happened without a single word of debate.
Gov. Nixon’s interpretation also renders other parts of SB 509 meaningless. Another part of SB 509 enacts additional tax relief for small business owners through a similar series of modest tax deductions. However, if, as Gov. Nixon alleges, income above $8,000 has a tax rate of zero, these deductions are meaningless because there’s no actual additional tax relief for any small business owner who has income in excess of $10,666.
Gov. Nixon’s defenders point to a special interpretative rule that tax statutes be strictly construed against the taxman. But it’s not absolute. There’s only one “cardinal rule” of statutory construction. As explained by the Missouri Supreme Court, the tax statute rule “does not require that statutory language be ignored and not given meaning that reasonably accords with the apparent intention the legislature expressed in the statute.”
For SB 509, the question is ultimately what the Legislature meant by the phrase “tax bracket.” Gov. Nixon’s advocates argue “tax bracket” means “a range of taxable incomes to which a particular tax rate applies.” This definition presumes that there must be a tax rate above zero for there to be a “tax bracket.” But this definition is inconsistent with other Missouri statutes, case law, and the dictionary definition of bracket.
Gov. Nixon’s claim that language “eliminating the top tax bracket” actually means setting the rate to zero would not actually effectuate the intent because it would not, in fact, “eliminate the top tax bracket.” Instead of eliminating it, under Gov. Nixon’s absurd interpretation, SB 509 would change the rate.
For these reasons, Missouri courts would reject Gov. Nixon’s absurd interpretation of SB 509. Instead, the only reasonable interpretation of the bill is that it abolishes the administrative wall requiring separate treatment of income over $8,000 versus income over $9,000. It does so by equalizing treatment between the two and merging them into one.
If I believed there was any chance Missouri courts would accept Gov. Nixon’s histrionic claim, I would act as I have on the blatantly unconstitutional gun bill that continues through the General Assembly: I’d vote no.
But Gov. Nixon’s is not a reasonable interpretation — it’s political theater, a crisis manufactured to scare votes into his column for the looming veto override fight set for late next week.
State Rep. Jay Barnes, R-Jefferson City, represents Missouri's 60th District.
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