Did Nixon nix the tax cut???
In a previous story, Associated Industries of Missouri (AIM) reported that Rep. Scott Fitzpatrick questioned whether the Missouri Department of Revenue, under authority of Governor Jay Nixon, had taken steps to prevent a tax cut by rapidly accelerating processing of refund claims in the month of June this year. Nixon had twice vetoed the tax cut, including a business income tax deduction that was an original idea of AIM. AIM actively supported both versions of the tax cut and worked to successfully override Nixon’s veto in 2015.
Rep. Scott Fitzpatrick
Until June 2016, revenues appeared to be on track to supply the revenue needed to trigger the tax cut. The first year of tax cut eligibility is 2017. In order to be effective, net general revenue for the previous fiscal year (FY 2016) would need to exceed the highest amount of net general revenue over the previous three fiscal years (FY 2013-15) by $150 million. The highest amount of net general revenue for FY 2013-15 was $8,709,167,292 in FY 2015. This means if net general revenues for FY 2016 were at least $8,859,167,292, Missouri taxpayers would receive a tax cut. Individual income tax rates would be decreased slightly and business taxpayers that pay taxes on their individual income tax returns would have reduced their business income taxes by 5% in 2017.
At the end of May 2016, all indicators were pointing to sufficient revenue collections to support the tax cut. With net general revenue of $8,136,629,328, the state needed net general revenue in June of at least $722,537,964 to trigger the tax cut. State net general revenue was $842,675,049 for the same month last year (June 2015) – $120 million more than the revenue necessary to trigger the tax cut.
Governor Jay Nixon
But oddly, when June 2016 was finished, it was revealed that the state had a 104% increase in refunds for the month over the amount refunded in June 2015. Refunds more than doubled as they increased by $131,422,912! This reduced net state general revenues to $650,143,767 – about $72.4 million less than the amount needed to trigger the tax cut for all Missourians.
The question we are asking: Did Governor Jay Nixon accelerate the processing of tax refunds to avoid a tax cut he aggressively opposed? We can never know for sure. Giving taxpayers their money back is certainly not against the law or even unethical. But all Missourians would have received a tax cut in 2017 absent this sudden increase in the speed of processing refunds, and it certainly makes one wonder.