Attention to detail often becomes more central to success when dealing with an issue or idea, rather than a tangible product or service.  Historic American Author Louis L’Amour said “There will come a time when you believe everything is finished. Yet that will be the beginning.” This can be applied to politics in the sense that many corporations, small businesses, and associations may believe the work stops within the legislature or with campaigns. While keeping a pulse on legislative action can play a major role in all market sectors, many battles can be lost in the administrative rules process as well.  There are 187 state agencies in Missouri that write rules and regulations to implement the laws in Missouri Revised Statutes (RSMo) passed by the General Assembly or through initiative petition.

Twice a month, Missouri’s Secretary of State publishes the Missouri Register. This contains proposed rulemakings by departments and agencies that are then subject to public comment and a hearing.  With 24 editions and over 1200 pages of proposed rules and regulations over the course of one year, it is easy to see why attention to detail is so important. A major component of the rulemaking process is the role of the Small Business Regulatory Fairness Board (SBRFB), which is charged with ensuring state agency rules and regulations do not create an unfair burden for small businesses.

A recent example of this can be seen in a rule published in November of 2008 by the Department of Social Services (DSS) that required all MO HealthNet providers to contract with a Patient Safety Organization (PSO) at the request of the Center for Medicare & Medicaid Services (CMS).  On January 3, 2012, the Department of Social Services proposed to rescind this rule after the Missouri Ambulatory Surgery Center Association (MASCA) filed suit for not properly engaging the SBRFB to analyze the impact this would have on small businesses.  Ambulatory surgery centers (ASCs) add considerable value to Missouri’s economy, with a 2009 statewide economic impact of $841.5 million, including more than $42 million in tax payments and employment of 1,800 full time workers. Additionally, for every dollar spent in the ASC sector of the state economy, $2.35 worth of economic value is created in the state.¹

Patient safety and convenience is the centerpiece of the ASC business model, as surgery centers strive to provide high quality medical care at lower costs with lower infection rates.  A recent national study found that seven-day mortality rates were 25 per 100,000 outpatient procedures at ASCs, compared to 50 per 100,000 in hospital outpatient departments. ¹ Therefore, a regulatory mandate by the Department of Social Services for ASCs to contract with PSO’s could be a cost burden with little to no added value to the quality of care. Most importantly, the Department of Social Services skipped a vital step when they bypassed the SBRFB and neglected the impact this mandate might have on ASCs in Missouri.

This recent victory by the Missouri Ambulatory Surgery Center Association gives new meaning to free enterprise and quality health care in our state.  With a strong lobbying voice and regulatory oversight, all corporations, small businesses, and associations can prevent state and federal government from implementing costly requirements that could be passed on to consumers.  It is MASCA’s mission to continue advocating for free enterprise and competition in the legislative and regulatory environment that will lead to lower costs and high quality care for Missouri patients.

Link to January 3, 2012 edition of Missouri Register:

http://www.sos.mo.gov/adrules/moreg/current/v37n1/v37n1.asp

Source: [1] Oxford Outcomes (2010). ASC Impact Analysis.

Any voter or concerned citizen that wonders how state income taxes impacts their local business climate needs not look any farther than this legislative year in Illinois state politics.  High income taxes have exported more working taxpayer wealth than our entire Missouri State Budget ($23 billion) from 1995 to 2008.  That didn’t stop state politicians from raising it further, prompting concerns and/or likely moves from Caterpillar, the Chicago Board Options Exchange, and Sears.

I traveled with Philanthropist Rex Sinquefield, a University of Chicago MBA Alumni, when he spoke on WGN’s Mike McConnell show last week.  As a retired entrepreneur whose investment business moved out of California, Rex Sinquefield understands how state tax policy directly impacts how businesses move and create jobs.  While Missouri is fortunate not to have politicians advocating for tax hikes today, Missouri is not well-poised to recover from this recession thanks to chronically-slow growth.  In fact, the Show Me State is one of only two states in the nation to never have a single decade of double digit growth in the last century.

MP3 of Rex Sinquefield on WGN’s Mike McConnell radio show.

There’s only one big reason to offer a constitutional amendment to permanently-end the tax on individual income:  to make Missouri competitive within our global job economy.  With the right tax policy, Missouri can apply its well-centered American position by giving you more of what everyone needs most – more in your wallet with every paycheck.  I hope that you will learn more from www.letvotersdecide.com or by following us by texting “MOREJOBS” at 41411.

Below is a press release from Let Voters Decide, our campaign to create real job growth for Missouri.  The process towards the Missouri ballot is long and hard, but there’s never been a more important time for voters to consider a better way for economic growth.   Since the Show-Me State is currently 48^th in the nation, the plan that we are on simply isn’t working.  When our state isn’t growing, it hurts everything that our state wants and needs to serve.

Contact:
Travis H. Brown, President, Let Voters Decide
(314) 540-5515

LET VOTERS DECIDE GATHERING SIGNATURES, GAINING MOMENTUM

October 5, 2011 (Jefferson City, Mo.) – The Let Voters Decide coalition recently announced significant momentum surrounding the Missouri Taxpayer Relief Act. The Secretary of State approved the measure, a critical step in its journey toward the November 2012 ballot. The Missouri Taxpayer Relief Act will soon be circulated for voter signatures.

“We are very pleased to have the opportunity to circulate this petition,” said Travis H. Brown, president of Let Voters Decide. “The Missouri Taxpayer Relief Act finally gives working Missourians a say about our state’s unfair double taxation. By collecting 120,000 signatures, we can show that voters statewide care about a new way forward for Missouri’s economy.”

The goal of the Missouri Taxpayer Relief Act is to phase out the individual income tax and replace it with a broad-based, consumer-driven sales tax. This means that Missourians would be taxed on those items that they choose to buy, not on the fruits of their labor.

“When you consider Missouri’s educated workforce and our ability to innovate, you would think our state would be thriving,” Brown said. “Yet the reality is that we have the third-worst GDP growth in the entire nation. This measure would make Missouri a better place for businesses and working families, which is why we believe people will be eager to sign our petition.”

Under the Missouri Taxpayer Relief Act, the state sales tax would increase by less than 3 percentage points. The expanded sales-tax base would provide our state with greater economic stability, making Missouri more likely to retain and attract businesses. Importantly, the Missouri Taxpayer Relief Act protects low-income families by exempting necessities (such as health care, child care and rent) from a sales tax.

“This is a common-sense approach that will provide all working Missourians with an immediate 6 percent pay raise,” added Brown. “We have a jobs plan worth doing, and through the initiative process, Missouri voters can move it forward. If passed, this measure will drive economic development and bring real, lasting growth to Missouri.”

For more information about the Let Voters Decide coalition and the Missouri Taxpayer Relief Act, visit www.LetVotersDecide.com.

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Among the eleven items specific to Governor Nixon’s legislative call was this one:

“To enact legislation authorizing an orderly transition in the governance of the St. Louis Metropolitan Police Department from a board of police commissioners to the City of St. Louis through a process that provides for equitable employment treatment for commissioned and civilian personnel.”

This past regular legislative session, an unprecedented coalition of grassroots constituencies emerged thanks in part to A Safer Missouri giving all citizens a strong voice. Such groups rallied to work out what became “an equitable treatment for commissioned and civilian personnel” impacted by restoring local control to the voters of St. Louis City. During the final days of session, consensus became clear that both the leadership and the rank-and-file within our public safety programs were eager to put Civil War history behind us.

Unique to Governor Nixon’s call is that while the Revised Statutes of Missouri within Chapter 84 deal with both Kansas City and St. Louis City, his request deals only with the chapters relevant to St. Louis City. This means local government interests in Kansas City that may have a different time table would be allowed to advance on their own terms if only the St. Louis legislation were enacted.

If you’re like the Kansas City Star, rooting for local police control within the City of Fountains, then perhaps special session is not for you. However, if you’re Kansas City Mayor Sly James, you should be booking your Jefferson City hotel stays after Labor Day.

Here’s why:

If the Missouri General Assembly fails to restore local control despite repeat consensus among all interested parties this year, it is likely that one of four initiative petitions will advance to the statewide ballot. Those petitions would restore local control not only for St. Louis City, but for Kansas City as well. Moreover, the language found within these petitions filed prior to the General Assembly compromise would not apply as it would have under a state legislative remedy.

The language, if advanced to the people’s ballot, is quite short and direct:

“Shall the Missouri Constitution be amended to:

Require that all municipal police forces or departments be controlled by the municipal governing body where the police force or department is located; and
Require the governing body of any city whose municipal police force or department was under state control, currently St. Louis and Kansas City, to maintain the terms of any existing pension plan for current or retired officers or employees of such police force or department who were hired prior to November 6, 2012?

Local governmental entities estimated savings from this proposal of at least $7.8 million, but the total potential savings is unknown. It is estimated the proposal would have no cost or savings to state governmental entities.”

Special session has to be special for Mayor Sly James of Kansas City – that is, if his office desires some freedom to operate within its windows of time with City Council. If Mayor James doesn’t advocate for this practical short-run solution for St. Louis in Jefferson City, he will be inviting many others to intervene in his Kansas City budget and safety priorities for the rest of his term.

Here’s hoping that our Kansas City leadership comes back to the State Capitol, and brings with them some Gates barbecue – so that the only “burnt ends” there aren’t political.

Travis H. Brown is a registered Missouri State Lobbyist for “A Safer Missouri” and “Rex & Jeanne Sinquefield.”

In what might initially sound like a leisure water sport, dragon boat racing will undoubtedly leave paddlers breathless and drained of energy after three intense races across Creve Coeur Lake.  In what is symbolic of most team activities, whether it’s in the athletic arena or corporate and government workforce, synchronized team effort and coordinated action define success at the finish line.  Despite the physical exertion, the competitive nature and philanthropic spirit of the event sends teams rushing back each year to take part in the festival and benefit the Signature Health Foundation.  Aside from the races, the festival included live music, barbeque, and fun activities for the 25 teams, friends, and families.

All proceeds of this event benefit Operation Family Help, a new Signature Healthcare Foundation initiative to assist families of patients with financial challenges by providing services such as therapy, equipment or transportation.  Signature Healthcare Foundation was founded in 2002 with a vision to “be a recognized leader in the local and national health care dialogue and spearhead physician leadership in improvements and efficiencies in the healthcare delivery system.” Signature Medical Group, its founding organization, has been a longtime lobbying client of Pelopidas in the Missouri Legislature and our organizations have actively worked together outside of government affairs over the years to benefit a variety of philanthropic causes in the St. Louis community.

Our Pelopidas team would like to thank John Marshall and the rest of Signature Healthcare Foundation for putting on a great event to benefit the community.  After a few weeks of rest and muscle relaxers, the Pelopidas Pow-Oar-House will begin training for next year’s competition!

While the City of Saint Louis will soon be 250 years old, the international sport of Chess dates back to at least 1500 years. That got several of our lobbyists and media experts wondering: is the professional idea of chess older than the idea of taxing one’s personal income?

The early forms of the game that became chess come from India before or around the 6th century AD. Some may claim that early civilizations that tithed by offering up their first fruits could count as a concept of taxing personal production. However, Wikipedia takes us to ancient China in the year 10 CE. Emperor Wang Mang slapped his Xin Dynasty with ten percent tax on all profits for professional and skilled labor. Without the benefit of facebook, twitter, or email, it took his citizens only 13 years to overthrow him and repeal such policies.

As chess spread into Persia, and later into Europe, so did the concept of taxing one’s income. If chess can be thought of as a professional sport that simulates the Art of War, then it’s financier with past governments in real war was often the income tax. At least that has often been the excuse, as Britain chose to do in preparation for the Napoleonic Wars in 1798.

Eighteen years later, the war income tax did get repealed, but, true to some halls of government, its memory was not forgotten. Meanwhile, by 1851, London gave the world our first modern chess tournament than was won by a German. Dueling tournaments across European countries helped shape chess as a sport for all kingdoms, cultures, and ages.

Ten years later, America imposed its first personal income tax for, well, you guessed, war again.

The Revenue Act of 1861 charged 3% off all incomes over the near equivalent of $20,000 or more in today’s terms. The fledgling State of Missouri also imposes its first temporary income tax which was quickly-repealed after the Civil War.

As civil war moved to reparation and reconstruction in America, here came the World Chess Championship of 1886 where four matches were played in Saint Louis. This international event featured the civic rise of our great city at a time without any city earnings tax, or tax on a professional athlete’s income.

With prosperity in American from the 1880’s to the 1910’s came a surge in chess as a sport again.

A curious political series of turns then concluded by 1913 with the 16th Amendment that gave Americans their first peacetime income tax. At the State level, Missouri’s income tax table was later applied from the Great Depression time when no one ever expected to have income, in 1931.

As the rules on taxing income shifted when the “wars on prohibition” demanded more government revenues, so did the popularity and focus of the game of chess within the Show Me State.

So, the origin of chess and income taxes may be hard to compare, but their justifications and use between war and peacetimes has certainly been cyclical over the generations. Saint Louis City and Missouri itself may prove pivotal to the next chapter of both subjects, as the City opens a new Hall of Fame while the State tries to end its personal income tax .

In one of our next blogs, we will compare tax tables to chess moves in the context of contemporary history to explore this subject further.

Bordering prosperous, business friendly Texas, Oklahoma has found itself lagging behind the Lone Star state in economic performance. According to the US Census, Oklahoma grew by 6.85% over the preceding 10 years, while Texas managed 18.85% growth. As a result, Texas gained 4 electoral seats for a total of 38 while Oklahoma only managed to hold on to its 7 votes.

There is little doubt that Texas is outperforming Oklahoma in terms of job creation, economic growth and attracting businesses to relocate to the state. One factor that makes Texas more competitive is its lack of personal income tax, relative to Oklahoma’s top rate of 5.5%. Oklahoma not only taxes individuals 5.5% of their income, but does this on every dollar earned above $8,700, suggesting that almost everyone working pays a marginal rate of 5.5%. While every state must collect taxes to provide the requisite services its citizens require, every state uses a different mix of income, sales and property taxes. The evidence suggests that states with no income tax, on average, grow significantly faster than those that impose an income tax (see Table 1 for details).

Oklahoma’s economic underperformance has been so severe that legislators have taken notice and are attempting to make changes by eliminating the state’s income tax. Legislation was introduced last week in the Oklahoma House of Representatives (HB1543) proposing eliminating the personal income tax over a period of 5 years. Should Oklahoma eliminate the tax, the state would be immediately better off with every Oklahoman receiving a 5.5% raise on their after tax income. Extra income in the pocket of state citizens means extra spending power, extra jobs and more personal freedom.

Closer to home, Tennessee is the only state neighboring Missouri without an income tax. Is it surprising that it is the fastest growing border state to Missouri? Tennessee grew 10.67% over the last 10 years; while the next best performer, Arkansas, achieved 8.08% growth. With Oklahoma attempting to eliminate its income tax, shouldn’t Missouri think about joining the race? The experience of Texas and Tennessee shows clearly how personal empowerment of individuals and no income taxes can lead to a better economy. Eliminating the personal income tax in Missouri would help attract business to Missouri from neighboring states, especially those that appear hell-bent on raising taxes and killing jobs such as Illinois, which recently raised its personal income tax. Within days, the CEO of Jimmy John’s announced that he will be moving the company’s headquarters, currently located in Champaign, IL, to a more business-friendly state. If Missouri had no income tax, the choice for Jimmy John’s new headquarters could easily be the Show-Me State.

States today compete to attract business and residents just as companies fight to attract customers. A more attractive tax environment, one with no personal income taxes, would benefit Missouri by helping us grow faster than neighboring states. The role of government is to create the best possible environment for economic growth, personal empowerment and the pursuit of happiness; evidence from other states shows that taxing income results in worse economic performance, while states with no income tax perform better. The 2010 US Census shows that Missouri will lose one congressional seat and will be the only state in the region to do so. It’s time that Missouri seriously considered eliminating its personal income tax. The results of the Census show that our economic policies over the last 10 years have not worked to attract business to Missouri. This has to change. It is time for big ideas.

More News about Oklahoma House Bill 1543

• Cockroft looks to end income tax
• Josh Cockroft begins political career

Table 1 – States with no personal income tax

Travis Brown, Rachel Keller Brown, Rex Sinquefield and Jeanne Sinquefield

In its fourth year, the annual Christmas benefit for St. Vincent Home for Children continues to build momentum. This year’s benefit brought in $75,000 through sponsorships from community leaders and businesses, and a live auction. St. Vincent’s creates a safe place for some of St. Louis’ most vulnerable children to live and learn.

One of the reasons that ideas like St. Vincent’s have been so successful is our country’s rich legacy of philanthropy. It is not casual. It’s not an afterthought. With centuries of growth and innovation, philanthropy has truly become a national treasure – and a nimble vehicle for change.

Early philanthropists like Andrew Carnegie and John D. Rockefeller used their wealth to create public assets – hospitals, schools, libraries, research – that are still used today. They popularized the idea that one could donate wealth while they were still alive, and that it could be a dynamic part of life, instead of a perfunctory part of a will.

In the early 20th century, fundraising grew to include more group giving, foundations that report on social conditions, and corporate giving. Recently, venture philanthropy and online fundraising have again revamped the idea of giving.

Applying the idea of venture capital to philanthropy has changed the donor-foundation relationship from one of transaction to one of ongoing support. Beyond financial support, a company assists with management and structural support, helps measure and improve outcomes, and typically invests over a period of years. Riffing on that model, organizations like Venture Philanthropy Partners pair D.C.-area donors who want to see great, positive change in their community with a portfolio of projects that combat a litany of issues facing children in D.C. Of charities and not-for-profits, VPP Co-Founder and Chairman Mario Morina says, “We ask them to do the remarkable, but we don’t give them the support to even do the negligible.” Venture philanthropy models hope to help donors give more strategically, and provide more comprehensive, long-term support for organizations.

Online giving has been especially powerful in giving donors of any size access and information to donate at any time. It’s a way for people to seek out causes they care about, and helps charitable organizations educate the public about their cause. E-philanthropy has also tapped small donors who may not be the target of mail campaigns, but could spare “as little as a cup of coffee”, and helped engage large efforts to respond quickly to disasters like Hurricane Katrina or this year’s devastating earthquake in Haiti. More than $30 million of donations to Haiti came in the form of text message. The Future of Philanthropy estimates that 25% of personal giving will be done online this year. But that still leaves 75% of personal giving that happens through personal appeals or fundraisers, and remains the core of fundraising.

Think about this for a minute: of the $303.8 billion charitable dollars given in the US in 2009, individual donors gave 75% of those dollars. The majority of US giving came not from corporations or foundations, but from individuals. In 2004, donations to tsunami victims reached $2 billion – three times what the US Government spent on disaster relief. Donations after Hurricane Katrina were nearly $6.5 billion, and donations to Haiti reached a similar level – in the first three weeks.

That’s an incredible force of people who weren’t coerced to give anything, but who chose to take action and donate to advance the causes they felt strongly about.

Missouri’s charitable giving is also quite strong: Missouri Foundations provide the state with $675 million in giving, and Missouri individuals gave $2.8 billion in 2008 (that’s an average of $3290 in contributions from each person who filed itemized charitable deductions). While individual donations may go to causes around the world, Missouri Foundation giving is a good measure of how Missourians support in-state needs.

We’re fortunate to work with the Sinquefield Charitable Foundation, which gives to such diverse causes as the Boy Scouts of America, music composition, education and chess – their giving directly impacts children in the area, our friends and neighbors, and it makes Missouri a magnet for organizations, talent and leaders who also want to see these causes thrive.

Philanthropy is more than a way to make us feel good. It might have that effect, but something more significant is driving this incredible scope of action. There’s a spark when we realize something is wrong – and that we have the tools or resources to do something about it. It’s a legacy our country has spontaneously nurtured, that we carry forward and improve upon, and it strengthens us as much as it strengthens the people we give to.

Before jumping to conclusions about the impact of the income tax on a state’s economic performance, let’s look at the facts and the data. How have the economies of Missouri and Tennessee performed over the last ten-plus years?

Let’s start by looking at the gross state product (GSP) as reported by the Bureau of Economic Analysis (BEA). In 1997, Missouri’s GSP was $157 billion and Tennessee’s was $153 billion; in other words, Missouri’s economy was 102.82% of TN’s. By 2008, just before the financial crisis, Missouri’s economy had grown to $241 billion while Tennessee’s reached $248 billion. In other words Missouri’s economy is now 97.25% the size of Tennessee’s, suggesting that Tennessee grew faster than Missouri during the past 11 years. This is in fact the case, as can be seen by computing the compounded average growth rates (CAGR) for Missouri and Tennessee. Over the last 11 years Missouri grew at 3.9407% per year while Tennessee grew by 4.4680% per year. The difference, 0.5273% per year, may appear very small but over time adds up to a lot. A tiny difference of half a percentage point per year compounded over 11 years has led Tennessee’s economy from being $4 billion smaller than MO’s, to being $7 billion larger. In other words, Tennessee’s economy created $11 billion dollars more wealth during the same 11-year period than Missouri’s did.

Headline numbers like gross state product (GSP) can obscure important facts because they aggregate and average a lot of data. The Bureau of Economic Analysis (BEA) breaks out detailed accounts such as private industry production, the government sector and the state and local government subcomponent. Therefore, looking at the subcomponents of GSP gives a more complete picture.

FFirst, let’s compare private industry growth. In 1997, private industry accounted for $140 billion and $136 billion in Missouri and Tennessee respectively. In 2008, these same numbers were $211 billion and $220 for Missouri and Tennessee respectively. These numbers imply compounded annual growth rates (CAGR) of 3.8090% and 4.5055% for Missouri and Tennessee respectively (a difference of 0.6965% per year). In Missouri, the private industry component grew slower than the GSP, suggesting that other components, such as the government sector, must have grown faster than average GSP. In contrast to this, private business in Tennessee grew faster than the overall economy in Tennessee, both of which expanded faster than Missouri’s GSP.

Second, let’s look at the state and local sector’s contribution to the GSP. It’s important to note that these figures include goods and services paid for directly by the state and local government and do not include transfer payments and other forms of welfare. State and local government accounted for $12 billion in both Missouri and Tennessee in 1997. By 2008, these figures totaled $21 billion and $20 billion in Missouri and Tennessee, implying a CAGR of 5.0897% for MO and 4.8562% in TN. This suggests that while both states’ economies grew, the government sector grew faster that did the GSP in both states.

Finally, it is worth looking at a few other measures, such as median incomes, population growth and median home values, all of which are reported by the Census Bureau and are summarized in the table below.

Over the last eight years, income per capita appears to have grown at basically the same rate in both states. While median home values appear to be growing more rapidly in Missouri based on CAGR numbers, home values are subject to a great degree of measurement uncertainty and are therefore much less telling than other measures. The only figure that really merits attention is the significantly more rapid rise of Tennessee’s population compared to that of Missouri. The difference in population growth over the past eight years is about 300,000 people in Tennessee’s favor – approximately the entire population of the City of St Louis.

While many possible differences between Missouri and Tennessee can be used to explain their different records of economic performance, it is impossible to argue with the data, which shows that Tennessee’s economy has grown faster than Missouri’s. It is also impossible to deny that taxes matter when individuals and businesses are deciding where to work or locate. Eliminating the state income tax in Missouri can make the Show-Me state a magnet for attracting individuals and businesses from across state lines.

In this short article, the data has demonstrated the superior economic growth rate of Tennessee: a no-income tax, pro-business state. The debate about repealing the income tax in Missouri is not a debate about how to replace the tax or what to exempt from taxation. The debate about repealing the income tax should be about how to best create an environment that fosters dynamic economic growth and job creation for Missouri in the 21^st century.