By Ray McCarty, President/CEO, Associated Industries of Missouri
September 19, 2022 - The Senate Appropriations Committee met today in response to Governor Mike Parson's call for around $700 in permanent income tax cuts and extension of agricultural tax credits during a special session he called for that purpose.
The Committee considered 11 bills, seven of which would cut income taxes in various ways. Chuck Pierce, expert tax lobbyist, appeared before the committee on behalf of Associated Industries of Missouri (AIM) in support of at least some parts of all the tax cut bills.
Mr. Pierce told the committee AIM supports keeping the reduction of revenues through any income taxes close to the $700 million requested by Governor Parson and that AIM prefers permanent tax reductions rather than one-time credits. Chuck explained to the Committee that more than 90% of businesses pay their taxes on the business operators' individual income tax returns. This means reducing the individual income tax also lowers taxes on business operators. He also pointed out the importance of the business income deduction, an AIM original idea, that reduces the amount of tax on business income that is reported by such operators. He noted such an adjustment is necessary to provide balance, particularly when considering reductions in corporation income taxes.
The Committee also heard bills that would renew and extend many agricultural tax credits, the wood energy tax credit, and many other incentives. AIM also testified in support of these bills, particularly those extending the wood energy tax credits and meat processing facility tax credits.
The Committee voted on the following bills, passing them from the Committee so they may be considered by the full Senate, probably later this week:
Senate Committee Substitute for SB's 3 & 5: Immediate reduction of individual income tax rate to 4.95% beginning in calendar year 2023, an additional .15% cut if state revenues exceed $175 million over the highest of the previous three fiscal years (likely in calendar year 2024), and up to three additional reductions of .1% each if state revenues exceed $200 million over the highest of the previous five fiscal years AND the revenue is more than revenues five years prior, adjusted for inflation. Finally, the personal exemption is increased to $1,000.
Senate Committee Substitute for SB's 1 & 6: Individual income tax rate reduction to 4.8% for tax years 2023 forward, increased personal exemption from $100 to $1,000, and an increased in the standard deduction to the amount of the federal standard deduction plus $2,000 for individual taxpayers and $4,000 for joint filers.
Senate Bill 8 - an agricultural tax credit extension bill.
Associated Industries of Missouri was the only statewide business advocacy organization supporting the tax cuts in the Senate hearings today. AIM is proud to serve as the state's oldest business advocacy group that is working hard to reduce taxes on businesses in this special session. We will keep you posted of our progress.