Where have all the tax dollars gone?
Despite a robust national economy and more Americans than ever working, well, Missouri can’t get tax dollars in the front door.
For example, in the past year wages have risen, on average nationwide, by 3.1%. According to December’s General Revenue Report , Missouri’s December income tax collections are down 0.5 percent compared to 12/17 and the Year To Date total is 3.7% below the last fiscal year!
It gets worse.
The end of December is the midpoint for Missouri’s fiscal year (July 1st to June 30th). December is also a major, major revenue month. Sales tax income pops, and, seasonal employment has a lot more workers paying income tax.
The good news: December 2018 Sales Tax collections jumped 12.1% compared to 12/17 and are running $400 million above last fiscal year.
The other news: both Individual Income Tax and Corporate tax revenue declined for the month and the fiscal year.
Remember, for every $1.00 in Individual Income Tax the state collects, around 33¢ comes in from Sales Tax and less than 7¢ from Corporate taxes. When Income Tax revenue declines Missouri just can’t make it up with revenue from other categories. As a result, the state probably is looking at a significant shortfall in General Revenue for the rest of this fiscal year. That means programs will need to be cut.
Now, here’s more bad news.
Remember the concerns raised about Missouri’s income tax withholding tables being too light? As noted in Columbia Daily Tribune and St. Louis Post-Dispatch articles…
An analysis by the department of 2,000 returns from single filers shows the average refund of $73.70 was replaced by an average payment owed of $64.99. For head-of-household filers — generally single taxpayers with children — the average refund was reduced from $156.07 to $17.61.
The Department of Revenue didn’t estimate the impact on married couples with kids because, well, “it’s a nightmare.”
“This is a major, major oversight,” state representative Kip Kendrick (D – Columbia) admits..
Expect a major portion – perhaps a majority – of Missouri taxpayers who used to get refunds to owe the state money in April. On paper that helps cash flow. Unfortunately, a lot of folks may need to pay what they owe in installments, delaying FY2019 revenue past July 1st and into FY2020! And, remember that Missouri still tracks better than $100 a week below the national median household income. You can only get so much money out of underfed turnips.
Ready for more bad news?
Due to the series of Individual Income Tax and Corporate tax cuts already approved by the Missouri legislature’s Republican super majorities in recent years, Missouri must expect to receive even less General Revenue in Fiscal Year 2020 and beyond! For example, the Missouri Scout reports that, per the official state Consensus Revenue Estimate, the accidental governor’s folks expect General Revenue to increase by $193 million in FY20: the passed tax cuts will cost Missouri $320 million in revenue.
Perhaps Missouri Democrats ought to be happy they’re not in charge this year.
Glenn