House passes tax cut bill
Rep. Andrew Koenig (Photo courtesy Tim Bommel, House Communications)
It looks like the Missouri General Assembly will pass some sort of significant tax cutting proposal this session, but the amount of the cut and who the cut will affect is still up in the air.
Wednesday, the Missouri House of Representatives voted 90-68 to pass Senate Bill 26, sponsored by Senator Will Kraus
The House version of SB 26 includes a two thirds of a percentage point cut to the state’s top tax rate of six percent over five years, so long as state tax revenues increase by at least $100 million dollars each year. The corporate income tax rate would be reduced by three quarters of a percentage point and there would be a new 50 percent deduction phased in for business income reported on personal tax returns, also dependent on at least a $100 million growth in tax revenues.
The bill also exempts the first $25,000 of corporate income from taxation, and nearly doubles the personal deduction on personal income taxes for those with adjusted gross incomes below $20,000. The bill also includes a three fifths of a percent increase in the state’s sales and use tax that would take effect only if state revenue collections go up by $100 million annually.
State Representative Andrew Koenig (R-St. Louis County) handled the bill in the House and said the legislation is Missouri’s answer to states such as Kansas, Oklahoma and Tennessee whose personal and business income tax structures continue to draw businesses and workers away from Missouri.
“The evidence is in, Missouri needs to act on tax reform,” said Koenig, wrapping up debate on the House floor Wednesday evening. “We need to reduce the burden of taxes on production.”
“The legislation passed by House Wednesday keeps the ball of tax reform rolling,” said Associated Industries of Missouri president Ray McCarty. “But this process is a long way from finished, and we will continue to work to reduce taxes on employers in Missouri.”
If the Senate refuses the House changes and a conference committee is able to come to a consensus on a final bill that is adopted by both houses of the legislature, there is still the obstacle of getting past Governor Nixon. On several occasions during the legislative session, Nixon has indicated he would be opposed to any legislation that includes a sales tax increase.
Republicans have a veto-proof majority in both the House and Senate. It takes 23 votes in the Senate to override a governor’s veto and 109 in the House. There are 23 Senate Republicans and 109 House Republicans. The House vote Wednesday indicates that not all Republicans in the House of Representatives are on board with the bill.