The House Committee on Tax Reform is considering legislation that would replace the existing state income tax with the so-called Fairness Tax – an idea designed to raise state revenues through a 5.11 percent state sales tax on new purchases of goods and services.
There are actually two bills that are being rolled into one – HB 814 – the main piece of legislation which is sponsored by Representative Ed Emery (R-Lamar) and a secondary bill – HB 318 – sponsored by Representative Chris Kelly (D-Columbia). Both aim to bring about what the sponsors believe would be a greater degree of fairness in the tax system.
One of Emery’s goals is to bring about simplicity.
"The fundamentals that give the Fair Tax an advantage are it’s simple," says Emery. "You don’t have to sit at home and run spread sheets and buy tax software to be able to determine what your taxes are going to be. You can look on every receipt and see exactly what you’re paying for state government."
State Representative Jeanette Mott Oxford (D-St. Louis) doubts the idea of increasing the sales tax would bring about fairness.
"Your formula," she tells Emery, "Will not actually help those who have inadequate resources come up with what it takes to live."
Emery explains the poor will qualify for a sales tax rebate.
The issue of the wealthy paying more because they can afford to do so was raised. Representative Kelly responded by expressing his view that the rich don’t always pay what they owe under the current system.
"The more powerful you are the more exemptions you will achieve every single time," says Kelly. "And a sales tax is much easier to see and to control the increase in exemptions."
The committee has made no decision on the legislation. Approval by the General Assembly would send the idea to a vote of the people.