Over the past six years, the Missouri General Assembly has debated the idea of tax credits. While the discussion of potential reforms to strengthen business is important to the creation of real ideas, it has not netted any reforms that benefit all businesses.
It is not a new idea to say that government does not create jobs, businesses do. The legislature has passed legislation to promote jobs by targeting particular types of businesses, sizes of businesses, and individuals who are considering creating a business. While the legislature has done a good job of promoting growth, the best way to promote business and restore prosperity is for government to relieve the burdens of over-regulation and over-taxation.
This year, Associated Industries of Missouri (AIM) asks every business leader to join in an effort to bring real tax reform to Missouri. House Bill 1639, titled the “Broad-Based Tax Relief Act of 2012”, will let employers keep and reinvest more of what they’ve earned. This legislation will cut the tax bill of every Missouri business, no matter how small or large, and regardless of the form of business organization they choose.
The “Broad-Based Tax Relief Act” proposes a fifty-percent reduction in business income tax through a five-year phase-in. The reforms would allow every Missouri business – whether an individual sole proprietorship, an LLC, an S-Corp, or major corporation – to declare half the business income made in a taxable year.
For an individual accountant who earns an annual $100,000 in business income for her consulting, it would cut her tax liability in half. Currently, she would be taxed at six percent on the $100,000 ($6,000 tax bill). After the full implementation of the “Broad-Based Tax Relief Act”, she would only owe $3,000. That is $3,000 more that she can provide to her family, buy health benefits, or reinvest in her business.
An S-corporation that makes $10 million in business income is also taxed at six percent. Paying $600,000 in taxes can really hinder a business’s ability to add jobs. But, after the Tax Relief Act, the business could reinvest $300,000 of that income now saved. And, the sky is the limit for major corporations that make billions of dollars in Missouri.
There are some in the legislature that feel a tax cut is not a wise decision with the state’s weakened economy and low tax revenues. Our bill sponsor, Representative Jerry Nolte (R-Gladstone) stated at our initial roll-out, “Now is the best time to roll out a tax cut, so we can provide tax relief to get this economy growing again. We will attract new businesses to Missouri while helping existing businesses and encouraging job growth.”
Join us in supporting the Broad-Based Tax Relief Act by contacting your local elected officials. Tell them that our government should provide incentives to every Missouri business – big or small, high-tech or shop floor, retail or restaurant – by supporting House Bill 1639.