Rex Sinquefield Aims to Kill Taxes in Missouri: Will He Take Preservation Down with Them? 12:03 PM

In yesterday's Post-Dispatch article "Big changes proposed for taxes," Rex Sinquefield defended his proposal to eliminate the state income tax and replace it with an expanded sales tax. Proponents of this method call it the "Fair Tax," as everyone pays the same tax rate on the same goods.

The provision, SJR29, would do all of the following (from the Post-Dispatch):

— Repeal state's 6 percent individual income tax, 6.25 percent corporate income tax and franchise tax beginning Jan. 1, 2012.

— Replace lost revenue with a greatly expanded and higher sales tax.

— Tax items and services that are currently exempt, including groceries, prescription drugs, medical care and K-12 private schooling.

— Eliminate all tax credits, such as those for historic preservation and maternity homes.

— Exempt business-to-business transactions, used goods and college tuition.

— Give all households a "prebate" to cover higher sales taxes on spending up to the poverty level.

— Require two-thirds vote by Legislature to enact more tax exemptions


At this juncture, I am most interested in the fate of historic preservation, one of Missouri's top economic development tools via the state tax credit for historic rehabilitations. Ridding of income tax means rendering tax credits useless.

Sinquefield notes that he actually supports historic preservation efforts and believes the tax credits should be replaced with "direct subsidies". I would like to ask him, how would this work? The state of Missouri's legislators have already attempted multiple times to eliminate the historic preservation tax credit altogether without the assistance of the Fair Tax proposal. Indeed, they have already placed restrictions on it, capping tax credits for larger projects. If the Fair Tax takes out those tax credits that were alleged to only benefit wealthy, connected developers, largely in St. Louis, who will be the unlucky one to try to introduce "direct" historic preservation subsidies?

I worry they would disappear forever--and with them, a city like St. Louis's chances for seeing large swaths of its aging built environment renovated as we saw in the 2000s under the current tax credit program.

I worry about other aspects of this proposal as well, including the effects on higher sales taxes on small, local, independent businesses and the possibility of people crossing state lines to avoid such higher taxes on goods.

The measure is headed for floor debate, possibly as soon as this week. If approved, voters would decide the ultimate fate of the bill in November.

Too Important 12:44 PM

Missouri's State Historic Rehabilitation Tax Credit is too important to be capped and eventually phased out. Its availability and liberal application all across the state has allowed the state of Missouri something it doesn't often get to claim: an accolade. Yes, Missouri's historic rehab tax credit has allowed it to brag about being #1 in the country for preservation credits. Missouri is finally #1 for something positive, right?

Well, a bunch of conservative politicans opposed on principle to tax credits has taken to dismantling Missouri's most successful economic development program in decades. These politicians would rather fuel the flames of urban resentment across the state than admit to the fact that dozens of counties and municipalities across the state have benefited from the tax credit. Don't believe me that it's a clear statement against Missouri's often maligned cities?

Read this piece of the proposed legislation:

The department of economic development is required to limit tax credit authorizations for St. Louis and Jackson Counties, and the City of St. Louis to the percentage of each fiscal year's allocation that each such city or county bears to the state's population.

The wording makes clear that outstate politicians are angry that the cities have so benefited from this tax credit. Their proposed legislation would limit the tax credit to 50 million dollars annually, and to phase the credit out by June 30, 2011.

Several urbanists are getting together to protest this proposed amendment to this highly successful tax credit on the steps of the state capitol in Jefferson City. Read more about that event over at Vanishing STL--and please, if you can, attend. This tax credit is too important to the future of St. Louis and the economy of the state as a whole.

If you need some numbers and some evidence of the tax credit's effect on St. Louis specifically, the Post-Dispatch Editorial Board has written an excellent piece on the need to wage an all out war to save the tax credit. Cliche as it may be, St. Louis's future may depend on it.

The P-D is correct; it is definitely time to mobilize.