Senate debates broad-based tax cut
As promised, broad-based tax cutting legislation made an early session appearance on the Senate floor this week.
Senate Bill 509 and 496, sponsored by Sen. Will Kraus (R-Independence) would reduce Missouri’s top individual income tax rate by 1% over a period of ten years, beginning with the 2015 tax year. The rate would be incrementally reduced each year if 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 that was vetoed by the governor last year.
The bill also provides a 10% – 50% business income deduction.
“This bill is not designed for one corporation or one company,” said Sen. Kraus during his opening statement on the bill Tuesday morning. “This is the people’s tax cut. This is for all Missouri taxpayers.”
Senate Bill 496, sponsored by Sen. Eric Schmitt (R-St. Louis), has been linked with Kraus’s SB 509. SB 496 focuses on tax cuts for flow-through entities. Schmitt says his legislation is aimed at small businesses, all the way down to two or three employees. Schmitt, during his opening remarks, said it’s from these companies that high-tech innovations come.
“These are the kinds of people that would benefit from saving half of what they currently send to Jefferson City, to reinvest in their business, to hire that second or third employee to do IT work, or to buy that new piece of equipment that’s going to make them more competitive,” said Schmitt.
Critics of the bills argue that the tax cuts would take too much in state revenues away from key state services, including education. Supporters say that tax cuts would spur economic growth, leading to higher tax collections from more employees working in higher paying jobs.
“Small businesses, when they are offered relief in the form of business tax relief, they’re going to take those dollars and reinvest them into their businesses to make them grow,” said Sen. Mike Kehoe (R-Jefferson City). “That’s how we grow and survive. You can’t sit still in business, you always have to do better.”
The debate is the first on broad-based tax cutting legislation this legislative session. Associated Industries president Ray McCarty says Kraus’ legislation is a step in the right direction, but doesn’t go far enough.
“AIM and TRIM prefer tax relief that helps ALL Missouri employers,” said McCarty. “These bills help a significant number of employers, but do nothing for employers that are organized as regular C corporations.”
McCarty says AIM and TRIM support the tax cuts in these bills as part of a wider ranging package of legislation that may come together later in the current legislative session.