SAINT LOUIS — The Show-Me Institute’s Policy Pulse news coverage contest is nearing an end, but there’s still time for interested students to submit entries — one of which could win a total of $1,250 in prize money. The last day to submit new stories is Wednesday, May 20.

The contest is sponsored in conjunction with the Missouri Broadcasters Association and the Missouri Press Association, in order to encourage young citizens and aspiring journalists to participate in Missouri’s political process by investigating policy areas of their choice and creating original news stories. The purpose of this competition is to develop a more informed citizenry, while training aspiring journalists to utilize new media to research, create, and communicate stories about today’s most interesting policy issues.

Students attending high schools and colleges throughout Missouri may submit original news stories covering any policy of their choosing. Acceptable forms of media include audio or video clips lasting no more than five minutes, or written articles of up to 1,000 words. Cash prizes in the amount of $500 will be awarded each month to the best entry written by one high school student and one college student. The college division winner for March has already been selected, and the winning article — which has, so far, won a $500 prize — can now be viewed on the Policy Pulse website.

Judges are still deliberating over the college division winner for April, and an announcement is expected soon. There were no high school division entries for either March or April, so no prizes could be awarded in that category. Again, students have until the end of the day on Wednesday, May 20, to submit entries for consideration in May’s contest.

At the end of May, an additional $750 grand prize will be awarded to the best overall submission from the three previous months, for each of the two school categories, along with a $500 prize awarded to the teacher or professor designated by these grand prize winners, to be presented at the Missouri Broadcasters Association award ceremony on June 6. Any submission that is of exceptional quality will also be posted on the Show-Me Institute’s comprehensive legislative tracking tool, Policy Pulse, online at ShowMePolicyPulse.org.

Contest rules may be viewed online. For more information, or to submit an entry, please contact:

Show-Me Institute
Attn: Jason Hannasch, Vice President
7777 Bonhomme Avenue, Suite 2150
Saint Louis, MO 63105
(314) 726-5655
info@showmeinstitute.org

Missouri’s only free-market think tank, the Show-Me Institute is a publicly supported 501(c)(3) charitable organization, and a research and educational institute that is dedicated to improving the quality of life for all citizens of Missouri by promoting sensible solutions to state and local policy issues.

Contacts:

Show-Me Institute

• Jason Hannasch — (314) 726-5655 — jason.hannasch@showmeinstitute.org
• Breck Frerking — (573) 449-8298 — breck.frerking@showmeinstitute.org

Missouri Broadcasters Association

• Don Hicks — (573) 636-6692 — dhicks@mbaweb.org

Missouri Broadcast Educators Association

• Leslie A. Cross — (573) 681-5295 — crossl@lincolnu.edu

By Andrew Veen
Policy Pulse Contest Winner

Andrew Veen

Two tax legislation bills on the docket in Missouri propose changes that could revolutionize the way residents pay taxes.

If passed, these bills (H.B. 318 and H.B. 814) would replace the corporate and personal income tax with a revenue-neutral flat rate sales tax on the purchase of new goods and services. The idea of a “flat” or “fair” tax is not a new one, but the emergence of these two pieces of legislation may bring the old debate out of the closet and back into the public consciousness. The ethical foundation for replacing the income tax with a sales tax is strong. Complete ownership of what one produces is a central tenet of freedom and a functioning market economy.

H.B. 318 and H.B. 814, sponsored by Chris Kelly (D-Columbia) and Edgar Emery (R-Lamar) are together better known as the “Elimination of Income Tax and Fair Tax Act of 2009.” The federal version of this proposal (FairTax) has lost momentum, but these bipartisan local bills seek to carry its intellectual torch to the people of Missouri.

The introduction of a flat-rate sales tax creates numerous tangible economic benefits. Most notably, it reduces disincentives to earn more. Under the current system, a worker may find himself willing and able to put in more time at work, only to bring home a smaller check if his increased income places him in a higher tax bracket. Also, a flat tax would place the choice of how much tax to pay — at least, to some extent — in the direct control of the taxpayer.

According to the Missouri Comprehensive Annual Financial Report for the 2008 fiscal year, $7.3 billion (over a third) of the state’s total revenue was generated through withholding taxes like the income tax. Supporters of the current system argue that the loss of that guaranteed stream of income for the state would render it incapable of properly fulfilling its roles and responsibilities. The income tax, they say, is vital.

It’s easy to understand why proponents of bigger government would be reluctant to switch from a withholding-based method to a pay-per-use method, because withholding taxes are nearly invisible to the average taxpayer. In a sales transaction, consumers know that they will have to pay some amount of tax. When buying a big ticket item like a house or a car, this amounts to a significant bill. Conversely, taxes like Social Security and the income tax don’t “come due” in a sense that would require the taxpayer to write out a check for the full amount. Either most of the bill has already been paid incrementally throughout the course of a year, or a refund is due. The inherently stealthy nature of this sort of taxation makes upward creep easier to ignore, and therefore easier to swallow.

As state expenditures and government programs continually grow, putting a full tax bill directly before the people of Missouri would provide a much-needed check on unnecessary expansion.

The most compelling argument offered by opponents of revenue-neutral taxation is that the poor are disproportionately affected. On a practical level, this is untrue. Those with higher incomes purchase relatively more goods and services, most of which are more expensive than those purchased by low-income families, and therefore pay more tax. Despite this, H.B. 814 has provisions to compensate families deemed to be impoverished or unduly harmed by the new tax methods, relieving them of any tax burden whatsoever.

So where does this leave the businesses? Opponents contend that businesses using state infrastructure in the process of making a profit owe something for that use, and argue that individuals shouldn’t have to shoulder the burden of running the state alone.

The economic response to this is to address how the tax will be paid. When a new tax is levied and consumers see an increase in the price of an item, they will purchase less of it. To compensate, businesses will seek a price level between the old price and the price-plus-tax in order to restore previous levels of sales — effectively splitting the cost of the tax with consumers.

Looking at this from the other side of the window, Missouri businesses currently pay income taxes. This would also contribute at least in part to a compensatory increase in price, above the price level that would exist without the tax, thereby splitting the difference with the consumer anyway.

In an interview with the Show-Me Institute, as quoted on the Policy Pulse website, Emery addressed this concern on an even more theoretical level: “Corporations only have the money that they take from their customers. So they’re not really a taxpayer, they’re a tax collector.”

H.B. 318 received its last bit of attention on March 11, and is now waiting to be advanced through the legislative process. If passed, Missouri will become the 10th state without an income tax.

 An article in the Wall Street Journal Online discusses the effects of falling fuel demand on ethanol producers.

Read the full article at the Wall Street Journal’s website.