Making Missouri a welcoming place for job creators and entrepreneurs
One of our early legislative victories for Missouri businesses and jobs was capping the corporate franchise taxes and instituting a complete phase out of this outdated tax. We achieved this by passing legislation I introduced in 2011 with bipartisan support. Now, five years later, the corporate franchise tax has been completely phased out.
The corporate franchise tax was imposed on corporations operating in the state and taxed them based on the value of their outstanding shares. In addition to taxes due on income, corporations would be required to pay the franchise tax for merely doing business in Missouri. This served as a disincentive for businesses to relocate here or stay in Missouri and my bill removed this undue burden on job creators and entrepreneurs.
The bill first capped corporate franchise tax liability at 2010 levels. This resulted in certainty for businesses already in the state by reining in rising tax bills. Next, the bill continually lowered the corporate franchise tax rate, which businesses must pay.
The final step in the process fully phased out the corporate franchise tax early this year. Businesses will have greater certainty than ever before – they will no longer need to allocate a certain amount of revenue to pay to the state for doing business here – they can instead re-invest their corporate franchise tax money back into their business to grow their operations and create jobs.
More needs to done to show that Missouri is serious when it comes to ensuring our tax code is attractive for businesses. This year I am sponsoring legislation that reduces the tax burden on Missouri workers and small businessmen and women, allowing that income to be reinvested in our economy through consumer spending and business growth. My legislation reduces the top individual income tax rate to 5 percent and would allow businesses to deduct 50 percent of their business income. Both provisions would be phased in over time, beginning in 2017.
With the leadership of the Missouri legislature, we are improving the business climate here so we can compete with our neighboring, low-tax states. Eliminating the corporate franchise tax is one more way we can show businesses that Missouri is open for business and welcoming to job creators and entrepreneurs who want to build and grow their business in the Show-Me State.
Senator Eric Schmitt, a Republican, was first elected to the Senate in 2008 and re-elected in 2012. He serves in Senate Leadership and as the Chairman of the Senate Committee on Jobs, Economic Development and Local Government. Schmitt graduated from Truman State University and Saint Louis University. Schmitt is running for State Treasurer this year. He lives in Glendale with his wife Jaime, and their three children.