Rex Sinquefield likes to write big checks. In 2010 he spent $11.3 million to bankroll a successful ballot initiative banning new local income taxes in Missouri. Voters overwhelmingly approved the measure. That was just a warm-up for a much bigger effort this year: repealing Missouri’s state income tax.
A retired financial industry executive—he helped devise the first Standard & Poor’s (MHP) index funds in 1973 and co-founded the asset management firm Dimensional Fund Advisors—Sinquefield explains his free-market vision in the parlor of his century-old St. Louis mansion. Income taxes “punish work,” stymie growth, and are “a horrible way to raise money,” he says. Sinquefield, who won’t divulge his net worth, is convinced that if he succeeds in repealing Missouri’s income tax, “other states will follow. I know they will.”
Photograph by TJ Proechel
Unlike other conservative businessmen such as Sheldon Adelson and Foster Friess, who are pouring millions of dollars into super PACs supporting Republican presidential candidates, Sinquefield, 67, is using his wealth to bypass the political establishment and appeal directly to voters. So far, he’s spent $2.5 million on a campaign to gather enough signatures to get the measure on the ballot, and he anticipates he’ll spend far more promoting the initiative from now until Election Day. “He’s dominating the landscape because he’s got so much money,” says James Moody, who was budget director for former Republican Governor (and later U.S. Attorney General) John Ashcroft and is part of a coalition opposing the repeal.
Sinquefield has been trying since 2008 to persuade leaders in Missouri’s General Assembly to pass a bill to repeal the income tax, without luck. “It drives me nuts,” he says. “That’s why we’ve been having to go to the ballot.” His plan would kill the state’s 6 percent personal income tax and raise the sales tax to a maximum of 7 percent from today’s 4 percent.
“There’s not a nice way to say it: They don’t know what they’re doing,” Moody says of Sinquefield and his supporters. Moody can see why people would find the idea of no income tax attractive but says it would leave a $3 billion hole in the state’s budget. Travis Brown, a Sinquefield ally and president of the ballot effort, called Let Voters Decide, says the tax change would pay for itself and brushes off forecasts of budget shortages as the work of “a couple bureaucrats.”
Tax reform isn’t the only issue that energizes Sinquefield. He has also been a vocal supporter of school vouchers and a critic of tenure for schoolteachers. In February he drew a torrent of protests after a presentation at Lindenwood University in suburban St. Louis, where he suggested the Ku Klux Klan had devised the public school system to hurt African-American children. He apologized a day later, calling the remarks “ill-timed and inappropriate.”
“He says what he thinks,” says David Booth, Sinquefield’s former business partner at Dimensional Fund Advisors. “Sometimes you can argue about whether he said it in the right way or not, but his heart’s in the right spot.”
Sinquefield has reason to be optimistic about his chances of getting the tax measure passed: Since 1992, 140 proposals to cut or limit taxes have appeared on ballots in 31 states, and 61 percent were approved, says Jennie Bowser, who tracks the issue at the National Conference of State Legislatures in Denver. Yet it’s possible that Missourians won’t have the chance to vote on the matter. Sinquefield and the state auditor are fighting over how the proposal is worded on the ballot; a state court is expected to rule next month on the dispute. Sinquefield has made it clear that if he doesn’t succeed this time, he’ll be back in 2014. As Moody puts it, “I don’t think Rex is going to go away.”