By Johnny Kampis | Missouri Watchdog
Missouri Republicans failed in their bid to override Gov. Jay Nixon’s veto of their income tax reduction bill Wednesday.
Perhaps they should look to lower sales taxes instead.
A recent report from the non-partisan Tax Foundation found the Show-Me State has the 14th highest average sales tax rate in the country at 7.51 percent.
While the state sales tax of 4.225 is one of the lowest in the United States (ranking 37th), that’s mitigated by high local tax rates in some areas, especially around St. Louis and Kansas City. The average local sales tax rate of 3.28 percent was the sixth highest in the country.
The study’s author, Scott Drenkard, argues retail sales taxes are more transparent than graduated income tax rates.
“People can reach into their pocket and see the rate printed on a receipt,” he wrote.
But he noted the widely varying local sales tax rates that differ not only from state to state – 38 allow them, 12 do not – but also from jurisdiction to jurisdiction can also mask the impact of sales taxes on personal finances.
“These (local) rates can be substantial, so a state with a moderate statewide sales tax rate could actually have a very high combined state-local rate compared to other states,” Drenkard wrote.
Sales tax avoidance is an issue in some areas, such as in Chicago, where value-conscious consumers often purchase big ticket items in nearby suburbs to avoid the Windy City’s 9.25 percent sales tax rate.
That’s less a concern in Missouri, which is mostly surrounded by fellow high tax states. Tennessee and Arkansas rank first and second with average tax rates exceeding 9 percent, while Oklahoma ranks fifth. Illinois and Kansas boast similar taxes to Missouri. The state’s northern neighbor, Iowa, ranks 27th with an average tax rate of 6.78 percent, while Kentucky and Nebraska tax consumers at a similar standard.