Senate continues work on tax cutting legislation – hears House bills
We told you earlier this week that the Senate had passed a tax cut bill by Senator Will Kraus and Senator Eric Schmitt, SB 509. That bill was sent to the House and was “second read” this week. Next, the bill will be referred to a House committee for further consideration.
Two House bills were heard in Senator Kraus’ Senate Ways and Means Committee today.
HB 1253, sponsored by Rep. T.J. Berry, a bill that would cut income taxes in half for EVERY Missouri business over five years of growth in income tax revenues was heard by the Committee. The bill would provide the cut in five equal steps and would provide equal benefit regardless of the way the business is organized. The corporation income tax rate would be reduced for corporations. A business income tax deduction, an innovative idea first developed by AIM/TRIM, would be provided to the 94% of businesses that report their taxes on their individual income tax returns.
The Committee also heard House Ways and Means Chairman Andrew Koenig’s HB 1295, a tax cutting bill that would reduce the individual income tax by .7% over 7 years of growth in state revenues, provide a 50% business income tax deduction, and an additional deduction for lower income individuals. Each step of reduction requires $150 million growth in revenue over the highest amount collected in the previous three fiscal years.
Rep. Koenig pointed out to the committee that 9 states that have no income tax have higher growth state product (GSP), higher employment growth, and greater population growth than the 9 states with the highest income tax rates. He also pointed out that 10 out of 10 states that implemented new income taxes over the last 50 years have lost population, GSP and wages relative to the U.S. as a whole. He stated the income tax is the most destructive tax on economic growth and activity and that the bill contained important safeguards and triggers to prevent revenue shortfalls.
The Senate Committee took no action on the bills today, but is expected to move the bills soon.
Governor Jay Nixon, on the other hand, called SB 509 a “nonstarter”. In a statement issued Monday, Governor Nixon said, “In fact, with a price tag of more than $620 million annually, Senate Bill 509 is the equivalent of wiping out the investments needed to fully fund our K-12 foundation formula and keep college affordable. Once again, the choice facing members of the General Assembly is clear: they can invest in good schools and create good jobs or they can support reckless fiscal experiments, but they cannot do both.”
Sound familiar? It should. In his veto message on HB 253 last summer, Nixon called the bill a “fiscally irresponsible experiment”. In a press event at an elementary school just prior to the veto session, he called the bill a “reckless fiscal experiment” and said legislators had to choose between education and the tax cut. He used the same term at each stop as he flew across the state campaigning in support of his veto of HB 253 throughout the summer.
Calling a responsible plan to allow taxpayers to keep some of their own money a “reckless fiscal experiment” worked last year, as legislators failed to override the Governor’s veto of the bill. Will it work again? Or will taxpayers get to reinvest some of their money in jobs and better pay for workers? Associated Industries of Missouri believes taxpayers know how to spend money in ways that benefit the state better than state bureaucrats – that jobs provide the best form of economic development.
Stay tuned for more as we move through the final six weeks of the legislative session!