McCarty testifies in favor of Senate Bill 26
AIM president Ray McCarty testifies in favor of Senate Bill 26 in front of a House committee. On McCarty’s left is the bill’s sponsor, Sen. Will Kraus.
Reiterating that it’s a good first step on the way to meaningful business tax reduction, Associated Industries’ president Ray McCarty testified in favor of Senate Bill 26 Tuesday in a hearing on the bill in the House of Representatives’ Ways and Means Committee.
The legislation, sponsored by Sen. Will Kraus (R-Lee’s Summit) contains AIM’s priority legislation, a phased-in 50 percent business tax deduction by 2016. The act also exempts $25,000 of corporate income from taxation. The bill also lowers the individual and corporate state income tax by .75% over a five year period beginning with tax year 2014. The maximum tax rate on corporate income would be 5.5 percent for all tax years beginning on or after January 1, 2018. At that time, the personal tax rate would be limited to 5.25 percent.
Also phased in over a five-year period will be a raise in the state sales and use tax, from 4 percent to 4.5 percent.
“The corporation income tax rate cut is not as much as we recommended in our bill,” said McCarty. “The bill also reduces taxes for individuals, and because it reduces the rate on individuals, it’s very expensive.”
McCarty told committee members that corporations will not get all they want from the bill due to the raise in the state’s use tax rate.
Kraus admits his bill is not the massive tax cut and overhaul some legislators were calling for. Compared to Kansas, which by some estimates will collect $1.8 billion dollars less in tax revenue this year, Kraus told the committee his bill is a drop in the bucket.
“This bill will cut $477 million dollars over five years,” said Kraus. “I think it’s a methodical, thought out, stepped, process that makes Missouri’s tax policy better for businesses to reinvest, and give taxpayers their money back so they can spend it in our economy and create more jobs.”
The Ways and Means Committee did not take action on the bill immediately after the hearing, leaving the bill open for changes. It’s a process McCarty says AIM will be watching carefully.
“The bill is on the right track,” said McCarty. “We want to be sure that it brings about meaningful savings for businesses and individuals.”