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Legislature begins work on important bills

The Missouri House and Senate are off and running, beginning work early on several pieces of important legislation.

The week began with a hearing on so-called “Right to Work” legislation in the House Committee on Workforce Development and Workplace Safety. The sponsor of House Bill 1099, Rep. Eric Burlison (R-Springfield) refers to the legislation as “Freedom to Work” legislation. The bill reads that workers should not have to join unions as a term of their employment.

Both sides on the issue spent more than five hours in testimony before the committee. Committee chair Rep. Bill Lant (R-Joplin) told committee members that the group will hear all of the bills on the Right to Work issue, of which there are several. The committee did not vote on Burlison’s bill.

Tuesday, it was the Senate’s turn to join in on hot topics when it comes to employers and employees. The Senate Small Business Insurance and Industry Committee heard Senate Bill 510, sponsored by Sen. Will Kraus (R-Lee’s Summit) on refining the definition of “misconduct” and “good cause” when it comes to receiving unemployment benefits.

Court rulings over the last several years have too often sided with employees who are dismissed for violating company rules and policies. The lax rulings have left Missouri’s unemployment system in the red.

“People are simply getting unemployment benefits who don’t deserve them,” said Sen. Kraus during the hearing.

Associated Industries of Missouri president Ray McCarty says unemployment benefits need to be reserved for people who are unemployed through no fault of their own.

“(This) bill would inject common sense into the unemployment system,” wrote McCarty in testimony prepared for the committee. “Claimants that have violated company policies would no longer be able to obtain unemployment benefits, under normal circumstances.”

Wednesday saw a couple of economic development bills presented to the House Committee on International Trade. House Bill 1055 would create the Missouri International Business Advertising Fund to be used to attract international businesses to Missouri. Meanwhile, House Bill 1089 establishes the Bring Jobs Home Act, which authorizes a tax deduction for out-of state businesses that relocate to Missouri.

Thursday, many of the Senate’s tax cut bills will be considered for the first time during a hearing of the Senate Ways and Means Committee.

Senator Kraus unveiled Senate Bill 509. The bill would reduce Missouri’s top individual income tax rate by one percent over a period of 10 years beginning in the 2015 tax year. The rate would be incrementally reduced each year if net state general revenue grows by at least $100 million above the highest amount collected over the previous three years, similar to the “triggers” contained in the tax cut bill last year (HB253) that was vetoed by Governor Nixon.

The bill also provides a 10 percent-to-50 percent business income tax deduction, but excludes farm or ranch income, both of which are businesses. AIM does not endorse treating such businesses differently from other employers and will work with Sen. Kraus to remove this limitation.

SB509 would provide a limited benefit to regular corporations by exempting $25,000 in income, a tax benefit of about $1,562.50 for all corporations earning at least $25,000 in Missouri income.

“We prefer a tax reduction that helps all Missouri employers equally,” said McCarty in remarks prepared for the committee. “AIM and TRIM support the tax cuts in this bill as a part of a larger tax cut bill that will help all employers in Missouri equally, regardless of how they are organized.”

The Ways and Means Committee will also hear tax cutting proposals from Sen. Eric Schmitt in Senate Bill 496 and Senate Bill 497.

Senate Bill 496 is similar to last year’s House Bill 253 in that it provides for phased-in deductions for a percentage of business income. The term is defined to exclude compensation and is designed to help owners and operators of businesses that operate as sole proprietors, partnerships, S Corporations, LLP’s, LLC’s or other “flow through” entities.

The deduction would be equal to 10 percent of business income the first year, 20 percent the second year and so forth until the maximum deduction of 50 percent is reached.

Senate Bill 497 would reduce Missouri’s top individual income tax rate from six percent to five-and-a-half percent beginning in the 2015 tax year. The rate would be reduced further if net state general revenue grows by at least $100 million above the highest amount collected over the previous three years.

The total rate after all phase-in rate reductions would be four percent.

While the bill affects all taxpayers with more than $8,000 in income, many small businesses and businesses formed as flow-through entities like S Corporations, partnerships, LLP’s, etc. would benefit from the legislation.

“AIM and TRIM prefer tax relief that helps ALL Missouri employers,” writes McCarty. “This bill helps a significant number of employers but does nothing for the employers that are organized as regular C Corporations.”

“Therefore, we support the tax cut in this bill as a part of a larger tax cut bill that will help all employers in Missouri, regardless of how they are organized,” McCarty wrote.

None of the legislation mentioned above is expected to come out of its committee without some reworking in the weeks ahead. But, leaders in both chambers having placed these bills on legislative calendars so early in the session are obviously eager to bring together legislation on economic development and tax issues very early on in the legislative session.

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