A March 18 letter from Kendall Ponder had some amazing claims for the Fair Tax proposition. I have some questions.
He states the "... vast majority of economists also regard a sales tax as the most efficient means of taxation to promote economic growth." No! I assure you that is not true. Rex Sinquefield's think tank, the Show Me Institute, would say that. Jim Moody and other economists would say no.
Mr. Ponder admits the sales tax is regressive but says a "prebate" eliminates that fact. A prebate is a state-funded giveback for sales taxes. Unfortunately, the prebate is not a part of the initiative. It would have to be added later by our Legislature. Even the Show Me Institute says this would cost an additional $2 billion. Can you think of anything the Missouri Legislature has done lately for anyone but the rich? And who will get the prebate? Will it be only for those in the lowest economic strata? Or will it go higher.
Mr. Ponder has some examples to show the Fair Tax is better than the current Missouri state income tax. The most representative example is a family with two children making $50,000 a year. Remember the Missouri income tax is among the lowest in the nation. It caps at 6 percent when you reach an income of $9,000 dollars.
He says this family would pay $6,000 in tax or 12 percent. By definition that is wrong. You can simply test his data by going to http://dor.mo.gov/forms/index.php?category=3 Use his data and you will see this average family will pay less than $2,000. That is a $4-5,000 error, Mr. Ponder.
Are his other numbers realistic or supported by fact. We have no idea where the numbers come from; there is no way to check his other examples.
The Fair Tax proposal is a major restructuring of the Missouri tax. Personal and corporate taxes will be removed. Tax revenue would need be replaced by a greatly expanded sales tax. To regain lost revenues doctor and dental bills, property sales and virtually all money transactions would need to be taxed.
We have overstatements, no quoted sources and faulty data from Mr. Ponder. Is this any way to support an argument?
He and others like him should read Jim Moody's report and get the facts. The Fair Tax is not a magic bullet. It will cost Missourians dearly if passed.