Seeking to make Missouri’s tax rates more competitive, Senators have given first round approval to a bill to reduce the tax burden on citizens and businesses.
Senate Bill 509, sponsored by Sen. Will Kraus, R-Lee’s Summit, contains a number of tax cutting provisions. Among them, the bill would cut Missouri’s top income tax rate from 6 percent to 5.5 percent over a number of years, beginning in two years. The tax cut would only phase in during years when the state’s general revenue collections grow by at least $150 million.
In addition, the bill creates an individual income tax deduction for business income, which would also be phased in beginning in 2017. The new deduction would allow Missouri businesses to deduct up to 25 percent of their business income. This also would be triggered by state revenues increasing by $150 million.
The bill also includes a new $500 deduction for Missourians making less than $20,000.
It is estimated that the tax cut would cost Missouri approximately $450 million.
Earlier versions of the bill included triggers related to funding the state’s education foundation formula and reforming Missouri’s tax credit system. However, those were eliminated from the Senate-passed bill in favor of the simple revenue growth trigger.
During floor discussion on the bill, Sen. Kraus stressed that the two year delay and the $150 million revenue growth trigger would protect education funding as the tax cut is phased in. He said that passing a tax cut was critical as Missouri seeks to enhance our business climate and grow our economy.
Senate Bill 509 is one of several tax cut proposals currently under consideration. Among the others are House Bills 1253, 1295 and 1297. House Bill 1253 is sponsored by Rep. T.J. Berry, R-Kearney, while House Bills 1295 and 1297 are sponsored by Rep. Andrew Koenig, R-Manchester.
The Missouri Chamber supports efforts to reduce taxation in our state while holding education funding harmless.
For more information about tax legislation, contact Tracy King, Missouri Chamber vice president of governmental affairs, at email@example.com, or by phone at 573-634-3511.