Missouri Decides Whether to Tax Lawyers or Soap Bars: Muni Week

Missouri Governor Jay Nixon, a Democrat, says an election tomorrow on whether to raise the sales tax may bestow an unwanted honor on the Show Me State.

“If this effort is successful, Missouri will have the dubious distinction of being a state that, in a matter of months, cut taxes on lawyers and lobbyists, but hiked taxes on bar soap and baseball gloves,” he said last month.

Nixon, 58, the head of a politically divided state government, has been clashing with the Republican-led legislature over taxes. Tomorrow’s referendum is no exception.

Republican lawmakers prevailed in a showdown with the governor in May, when they overrode his veto to cut residents’ income taxes by as much as $620 million a year.

Then they passed another bill: a request to let voters decide on a $5.4 billion sales-tax increase over a decade, with the proceeds used to pay for upkeep of roads.

Supporters say both steps are about boosting the economy.

Construction companies, labor unions and others who stand to gain from the revenue influx have poured more than $4 million into the campaign to support the measure, which would also block any increase in gasoline taxes or new tolls. They’ve far outraised foes.

Nixon isn’t among the fans. He says it’s part of a push to give tax breaks to the wealthy and well connected, paid for by shifting more onto the poor, who spend most of what they make at the store.

Watch to see who Missourians love best: their lawyers or their baseball gloves.

***

Over the state line in Kansas, tax-cut politics have come to dominate Republican Governor Sam Brownback’s campaign for re-election, which gets an early test tomorrow.

Brownback, 57, a former U.S. senator and presidential candidate, has looked to tax cuts to draw jobs and residents -- with a goal of eliminating the income tax altogether. He settled for cuts in 2012 and 2013.

Revenue fell short of forecasts this year (which the administration blamed on federal tax changes), the jobs bonanza didn’t materialize and Moody’s Investors Service cut Kansas’s bond rating. Then 104 Republicans got behind his Democratic opponent, Paul Davis, in the November election.

Tomorrow, he’ll get a broader gauge of Republican sentiment. He’s facing a longshot primary challenge from Jennifer Winn, who’s running a shoestring campaign on a platform that includes legalizing marijuana. While Brownback is expected to win handily, Democrats are looking to it for clues to Davis’s odds this fall.

***

After legalizing pot in Colorado and Washington at the ballot box, advocates are moving on to the nation’s capital.

Backers are waiting this week to hear if a ballot measure that would let residents legally grow and possess marijuana will appear on the ballot in November. Giving it to friends would be fine; selling it, not so fine.

A victory -- if Congress, which oversees the district, can tolerate cannabis gardens in the shadow of Capitol Hill -- may be a sort of Waterloo in the war against the war on drugs, as Adam Eidinger, whose leading the campaign, put it.

***

Federal Reserve Chair Janet Yellen has been keeping an eye on the high-yield market as investors look for higher returns, given that interest rates hover near generational lows.

Such risk appetite may have played a role in the fortunes of tobacco bonds, a niche corner of the $3.7 trillion municipal securities market that rallied earlier this year, only to retreat since May.

States sold tobacco bonds to get an advance on money they’ll be paid under the 1998 legal settlement with manufacturers. The bonds are backed by revenue from cigarette sales, which ties their fate to an industry in decline.

Such bonds are on offer this week, for the taking: Rhode Island is selling $594 million of them, refinancing debt sold in 2002.

To contact the reporter on this story: William Selway in Washington at wselway@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Schoifet, Mark Tannenbaum

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.