Our last myth busters was explained why Professional Services, such as lobbyists, will not be taxed under the tax reform measure commonly called the “Fair Tax”. As a recap, the tax base used to calculate the tax rate DOES NOT include business to business transactions. Professional Services performed for businesses, including non-profits, would not be taxed.

The next myth buster focuses on a statement made in several meetings that sales taxes are more volatile than income taxes. When I first heard the statement I thought it was a simple misstatement. The second time I heard it, I couldn’t believe it was being made on purpose. As Ronald Reagan said, “A man is entitled to his own opinion but not his own facts.” The facts don’t support the statement.

The Office of Administration provided the last ten years of sales, income and corporate taxes. We took the data and plotted it using FY2000 as the normalized base. Here is the result.

Sales Tax Stability

The good news is few can be found who believed the statement and the facts prove they were right not to believe it.

We will continue to discuss other false issues being perpetuated about Tax Reform. Look forward to the dissection of how those predicting a 11% tax rate will be required to replaced the current 3% general revenue sales tax rate are wrong.

Here is a great summary of why Tax Reform is important to our economic future Missouri's Economy WILL Be Better with No Income Tax.