House GOP Will Vigorously Defend Tax Credits, Except When They're Vigorously Fighting to Eliminate Them
House Republicans in Jefferson City have expressed strongly opposition to evaluating the return on investment and sustainability of the state's tax credit programs, claiming that the current tax expenditures are the best ways to spend hundreds of millions of dollars in taxpayer money as other programs are eliminated or gutted. I disagree with their position, but there will be a lot of debate in the coming months about the wisdom of changing or not changing the state's tax credits. Hopefully, it will be a debate that focuses on what's best for all of the citizens of Missouri, and not just what's best for the campaign donors who promise that more money in their pockets is a great way to help the citizens of Missouri.
Yet while they promise to protect tax credits, they're pushing Rex Sinquefield's plan to junk the state's income tax and replace it with a higher sales tax to fund the state budget. As some crazy person told Missourinet, the legislature “will pass the fair tax or won’t pass anything.”
Are House Republicans-- and their campaign donors -- aware that these two plans aren't really compatible? As the Post-Dispatch's Virginia Young reported in February, Sinquefield's plan is bad news for the developers who rely on historic preservation tax credits. Indeed, the 2010 version of the sales tax proposal, SJR29, would have "eliminate[d] all tax credits, such as those for historic preservation and maternity homes."
Opponents say the FairTax proposal would be bad for Missouri. They say losers would include...Groups such as historic preservationists that rely on income tax credits. If the income tax disappears, there would no longer be a market for selling tax credits...
As for interest groups that would lose their lucrative tax credits, Sinquefield said that he supported some of those programs, such as historic preservation, but that they should get direct subsidies instead of tax breaks. "It's much healthier to do it out in the sunshine and get rid of the tax credit," he said.
Intellectually inconsistent budget and tax plans have been a hallmark of the House Republicans in recent years, so we probably shouldn't be all that surprised by this year's positions. But that doesn't mean it makes any sense.
