Associated Industries of Missouri applauds legislature’s action to cut taxes using AIM model
Associated Industries of Missouri applauds the bold steps taken by the Missouri legislature to override the governor’s veto of Senate Bill 509.
With today’s vote in the House of Representatives, the General Assembly has accomplished what no other legislature has since the 1920’s…reduce income tax rates for all Missouri citizens and more than 95 percent of the state’s businesses.
“We’re happy to see the House and Senate take action to help Missouri taxpayers in ways they seldom have before,” said Ray McCarty, president of AIM.
AIM and McCarty are the authors of the tax cut at the heart of the legislation. The business income deduction was an idea McCarty developed after meeting with AIM members Kathy and Doug Bennett at Bennett Packaging, a manufacturer that is organized as an S corporation in Lee’s Summit in August of 2010.
In that conversation, the Bennetts pointed out that AIM’s efforts to reduce corporation income taxes did not help them because they were organized as an S corporation. McCarty realized S corporations paid their taxes on their individual income taxes, but noted that reducing individual income tax rates enough to make a difference for a business operation were cost prohibitive. As a result, McCarty wondered if Missouri could provide a partial deduction of the business income that “flows through” to the personal income tax return, and the idea of providing a “business income deduction” was born.
The idea was later signed off on by AIM’s 100-plus member tax committee, a collection of the top tax attorneys in the state and country. The committee refined the idea’s language, and AIM offered it for the first time during the 2011 legislative session. The business income tax deduction was a part of House Bill 253 in 2013, and House Bill 1253 and Senate Bill 509 this session.
“AIM is proud to have this tax reduction effort included in this bill,” said McCarty. “It’s taken four legislative sessions to bring it across the finish line, but this is the right thing to do for the state’s employers.”
McCarty was quick to point out the efforts of Sens. Will Kraus and Eric Schmitt, Reps. T.J. Berry, Andrew Koenig and former Rep. Jerry Nolte who championed the tax cutting cause the last three legislative sessions. McCarty also thanked House Majority Floor Leader John Diehl for his efforts in shepherding the tax cutting proposal through the legislative process in the House.
“Rep. Nolte was really the first to ‘get it’ when it came to the link between tax cuts for business and economic growth,” said McCarty. “Then Sen. Kraus, Sen. Schmitt and Rep. Berry and Rep. Koenig came along with their strong leadership through some pretty dark times. And finally, we couldn’t have done this without the strong steady hand of the floor leader in the House. Rep. Diehl took interest in this bill early and made sure that it received smooth sailing in a chamber where the waters can get choppy.”
“It’s time now to put all the partisan rancor behind us, and to set about building Missouri with the help of small and medium-sized businesses, the engine of our state’s economic machine” said McCarty.
ADDITIONAL RESOURCES:
Video from Senate floor, Senator Kraus explains bill
Video from Senate floor, Senator Eric Schmitt on help for small businesses