AIM applauds passage of historic federal tax reform bill
December 20, 2017
The state’s oldest business association is celebrating today’s passage of an historic tax cut bill in Congress. The bill will give America a competitive corporation income tax rate and provides benefits to all taxpayers, including special benefits for flow-through business entities that report their business income on their individual income tax returns.
“This is an historic occasion,” said Ray McCarty, president and CEO of Associated Industries of Missouri (AIM). “We look forward to the economic stimulus that will be provided by this significant reduction in tax burden on American businesses and all taxpayers. Some so-called experts are against the bill because the reductions in the individual income tax are temporary. This is a bit disingenuous as it is very unlikely any Members of Congress, including those voting against the bill today, will allow these tax cuts to expire. That would be an act of political suicide. We suspect the root of the opponents’ objections to the bill is there will be less money for the government to spend and more money in the pockets of American workers and job creators. For some, that is a problem. For the rest of us, it is cause for celebration,” he said.
A ”business income deduction” was included in the bill. McCarty recalls first discussing such a deduction for state income taxes in AIM’s Broad-Based Tax Relief Act of 2012, filed by then-Senator Eric Schmitt and then-Representative Jerry Nolte. The idea for a business income deduction originated from a conversation with Kathy Bennett of Bennett Packaging in Lee’s Summit.
“I visited with Kathy Bennett about all the things AIM was doing to reduce corporate tax liability and she told me that meant nothing to them because Bennett Packaging was an S Corporation,” said McCarty. “All the way back from Kansas City, I thought about ways to provide tax relief to taxpayers, like the Bennetts, that report their business income on their individual income tax returns. I came up with an idea that, according to tax experts on the AIM Tax Committee, had never been done before: a deduction for business income that flows through to the business owner/operator personal income tax return.”
Several AIM Tax Committee members helped McCarty develop the idea and AIM began trying to pass it in the 2012 Legislative Session. At that time, there was no business income deduction in any state. AIM successfully passed the business income deduction in HB 253 in 2013, sponsored by Rep. T.J. Berry and handled in the Senate by Sen. Schmitt, only to watch Governor Jay Nixon veto the bill. By the time AIM successfully passed and overrode Governor Jay Nixon’s veto of another bill sponsored by then-Senator Will Kraus and handled in the House by then-Rep. Andrew Koenig in 2014, a business income tax deduction was a reality in a few other states.
“Now, we get to see that novel idea included in an historic tax cut bill at the federal level,” said McCarty. “This is great news for more than 90% of Missouri businesses that are organized as S Corps, partnerships, or other ‘flow-through’ entities. This is real tax relief for hard working Missourians and job creators and we applaud President Trump, Senator Blunt, and our entire Missouri Republican Congressional delegation for making this tax cut a reality,” said McCarty.
Congressional Democrats, including Senator Claire McCaskill, Congressman Clay and Congressman Cleaver opposed the bill.
Associated Industries of Missouri was one of more than 250 companies and organizations signing a letter in support of the bill to the U. S. Senate that was circulated prior to the vote early Wednesday morning. AIM was the only Missouri business organization signing the letter.
Associated Industries of Missouri has served as the “Voice of Missouri Business” ® since 1919, making it the oldest general business trade association representing Missouri employers.