Millionaire chess player plans moves to eliminate Missouri income tax, St. Louis earnings tax

ST. LOUIS — Multimillionaire Rex Sinquefield has deep pockets and an even deeper interest in Missouri politics. And his retirement strategy meshes both. After making a fortune as an investment banker, Sinquefield is prepared to spend millions in the next few years to influence the Missouri public and help elect state and local officials who share his disdain for income taxes and troubled urban public schools. Missouri's elimination of campaign-donation limits could further help his cause and those of others with bankrolls big enough to wield influence in the state. Sinquefield's moniker and money are expected to be prominent on this week's campaign-finance reports, the first for statewide candidates since the limits were removed. The St. Louis native moved back to the state just two years ago after being away for 35 years. But he's swiftly making up for lost time. Sinquefield already has spent a bundle to help establish the Show-Me Institute, a free-market think tank based in Clayton. With an eight-member board of prominent bankers, economists and some Republicans, the institute pays for research studies into many of the issues that Sinquefield cares about, from the state's minimum wage to St. Louis' earnings tax. (He opposes both.) The institute, and the prospect of generous contributions, are among the reasons why Sinquefield has swiftly found himself on a first-name basis with most of Missouri's top elected officials in both parties. Many of them have been invited to the 1,000-acre estate that Sinquefield and his wife have built within the past five years on the banks of the Osage River, just a few miles from Jefferson City. The couple recently purchased a three-story mansion on one of St. Louis' historic private streets in the Central West End. Sinquefield plans to spend half of each week in the city to pursue his interests in philanthropy, sports and politics. "My whole motivation is to try to make Missouri a better place,'' he said. "I have no secret issues. I have no secret agenda." Sinquefield's direct approach has won him admiration, even from those wary of his objectives. "We just click on so many levels, on so many issues,'' said Lt. Gov. Peter Kinder, who agrees with Sinquefield's quest to abolish Missouri's income tax. Gov. Matt Blunt calls him a friend. So does House Speaker Rod Jetton, R-Marble Hill, who added, "People draw attention sometimes because of what they are worth, but Rex is a guy who achieved a great deal of success on his own and has gotten a lot of attention because he shows passion about some big issues." Former Gov. Bob Holden and current Secretary of State Robin Carnahan, both Democrats, also have dined with Sinquefield although both note they disagree with many of his stands. Holden, who's known Sinquefield for years, calls him a "generous and thoughtful person who wants to give back in his own way." Carnahan offers similar praise, but adds, "My sense was that he hasn't done a serious study of how his proposals would affect real people and the vital services that they expect from state government." Jim Kottmeyer, a consultant with several groups who have actively opposed Sinquefield's ideas, says there's no doubt that the multimillionaire's presence — and his pocketbook — are rapidly affecting the state's political landscape. Some of Sinquefield's political critics, for example, are afraid of attacking him in public out of fear that he'll heavily bankroll a political opponent. Said Kottmeyer: "I don't think they've seen anybody like him in Missouri.'' Raised in orphanage Sinquefield's rags-to-riches life is one of his attractions. Born in St. Louis, he spent six years in St. Vincent's orphanage — roughly ages 8 to 14 — before reuniting with his widowed mother and older sisters. He graduated from Bishop DuBourg High School near St. Louis Hills. Sinquefield attended Cardinal Glennon Seminary for three years before deciding the religious life was not for him. "I was studying to be a bishop. They said, 'Wait a minute, you have to be a priest first,'" Sinquefield recalled with a chuckle. He transferred to St. Louis University, graduating in 1967 with a business degree. In 1968, at the height of the Vietnam War, Sinquefield was drafted into the Army. But instead of being sent overseas, he was placed in the finance corps based at Fort Riley, Kan. After a two-year military stint, Sinquefield worked for banks in St. Louis and Chicago, the latter while also acquiring an MBA at the University of Chicago. He spent nine years with the American National Bank of Chicago, working his way up to be the head of its investment section and later, the trust department. His love of investing prompted Sinquefield to leave the bank in 1981 to co-found Dimensional Fund Advisors with business partner David Booth. The firm quickly grew, and now employs 330 people worldwide. In 2006, it managed at least $138 billion in funds. A spokeswoman confirmed that the firm's owners include employees, board members and 28 outside investors, including California Gov. Arnold Schwarzenegger. Long based in Santa Monica, Calif. — which Sinquefield dubs "Soviet Monica'' because of its high taxes — the firm now is relocating its headquarters to Austin, Texas. The draw: Texas doesn't have an income tax. Income tax battle Two years ago, Sinquefield retired from the firm to pursue his political and personal passions. His mantra, which he preaches to everyone he meets, is that state income taxes hurt job growth and economic prosperity. He makes the same argument about the earnings taxes levied by the cities of St. Louis and Kansas City and the minimum wage. In the case of state income taxes, Sinquefield points to the rapid growth experienced the nine states — including Florida, New Hampshire and Washington — that don't impose an income tax. The state income comes from other taxes, such as sales taxes. "The absence of that (income) tax is a powerful magnet,'' Sinquefield said. He also seeks constitutional restrictions on state spending. But Kottmeyer asserts that eliminating Missouri's income tax is "a dangerous idea for the state's economy. It's a giant tax break for the rich and a giant tax hike for consumers'' who would be saddled with higher sales taxes. As for St. Louis' earnings tax, Sinquefield proposes replacing it with a land tax that would be separate from a property tax. He notes that many city officials and corporate executives are looking for alternatives to the earnings tax. On the education front, Sinquefield is among several institute board members who have intervened in court against the 250-plus Missouri public school districts who are suing for changes in the state's aid-allocation formula. The Show-Me Institute has issued studies that generally agree with Sinquefield's views. But the experts who conduct the studies say he wielded no undue influence. "I have dealt with people who tried to direct research once they've commissioned a report from me,'' said Joseph Haslag, an economics professor at the University of Missouri-Columbia who has conducted several studies for the institute. "My relationship with the Show-Me Institute and Rex has been the exact opposite.'' Among Sinquefield's disappointments was last year's overwhelming statewide vote in favor of Proposition B, which increased Missouri's minimum wage to $6.50 an hour, up from $5.15. He agrees with business groups that particularly oppose the measure's mandate of annual cost-of-living increases, which Sinquefield contends will cost jobs. Kottmeyer advised the groups in favor of Proposition B, and says last fall's results were evidence that Missouri voters disagree with Sinquefield's views. "Rex has certainly got an agenda that has been rejected by a majority of Missourians,'' he said. Sinquefield replied that when it comes to a minimum wage, "Some things have common sense appeal, but they're just wrong." Known for chess, charm Sinquefield's passion for government change is softened by what even his critics describe as charm and compassion. Holden, for example, said Sinquefield offered one of the buildings on his estate for a Holden family reunion held when the former governor's mother was gravely ill. And Sinquefield and his staff emphasize that he's donating far more money to other personal passions besides politics, such as the symphony, St. Vincent's and after-school programs for the urban poor. A chess fanatic, Sinquefield is offering to start and bankroll a regionwide chess program for children. He's also honing his own chess skills to return to the tournament circuit. Sinquefield often plays chess online with other chess experts, in games that can take days for a single move. He appears to be adopting the same methodical, patient approach to state and local government. Sinquefield said he recognizes that it may take years for his vision to take hold. But he also is upfront about his political expectations. Sinquefield acknowledges that he's willing to pour millions of dollars into the campaigns of like-minded politicians. But he added that he'll contribute to campaigns only "as long as it advances this agenda." "If it doesn't," Sinquefield said with a smile, "I won't."