AIM says Senate tax bill good first step
It’s not perfect, but Associated Industries president Ray McCarty says Senate Bill 26 moves the ball of tax cuts down the playing field as the legislation passes the state Senate and moves on to the House of Representatives.
The legislation, sponsored by Sen. Will Kraus, R-Lee’s Summit, contains AIM’s priority legislation, a phased-in 50 percent business tax deduction by 2016. The act also exempts $25,000 of corporate income from taxation. The bill also lowers the individual and corporate state income tax by .75% over a five year period beginning with tax year 2014. The maximum tax
Sen. Will Kraus
rate on corporate income would be 5.5 percent for all tax years beginning on or after January 1, 2018. At that time, the personal tax rate would be limited to 5.25 percent.
Also phased in over a five-year period will be a raise in the state sales and use tax, from 4 percent to 4.5 percent.
“The corporation income tax rate cut is not as much as we recommended in our bill,” said McCarty. “The bill also reduces taxes for individuals, and because it reduces the rate on individuals, it’s very expensive.”
Hence the raise in the state sales and use tax, which has triggered a negative response from Governor Nixon.
“We would prefer to eliminate that altogether,” said McCarty.
McCarty favors reducing the taxes on business income alone, or the approach of State Representative T.J. Berry, R-Kearney, in House Bill 253, which sets Missouri on a schedule to reduce business taxes by 50 percent over a five-year period, but only if state revenues continue to grow. That bill currently sits on the calendar of the House Rules Committee.
McCarty says Senate Bill 26 is a very broad look at the way taxes work in the state of Missouri. On the Senate floor Tuesday, Kraus described his bill as a shift in philosophy away from income based taxes to consumption based taxes.
“We do still have to look at what the impact of that might be,” said McCarty. “The jury is still out on whether the sales tax increase is something that we would trade for the reductions in corporate income tax. It’s something we’re trying to find out from our partners where they stand with that.”
McCarty says there is still time in the legislative session to work on Senate Bill 26 as it works its way through the legislative process. The bill is now in the hands of the House of Representatives, and McCarty says the bill is not the finished product yet.
“The way the Senate finished the bill is not the final chapter in the bill,” said McCarty. “And we will continue to work on the House side to improve it. The Senate moving the bill on to the House is a good first step.”