On April 16, the Missouri House passed Senate Bill 509, legislation that would cut the individual income tax rate from 6 percent to 5.5 percent and phase in a 25 percent deduction on an individual’s business income. The vote was 104-48 and the bill is now headed to the governor’s desk for signature. The changes would not take effect until 2017. The Missouri Chamber of Commerce and Industry believes this legislation is a good start to improve Missouri’s economy through tax reform.
“The legislation is critical to keep Missouri in competition with other states that have reduced taxes. Six of the eight states bordering Missouri have made moves to cut taxes. Eighteen states cut taxes last year alone,” said Dan Mehan, Missouri Chamber president and CEO. “We are being left behind. In a decade, we definitely will see the difference in the economies of those states that have established aggressive tax policy and those states that stood still.”
The Missouri Chamber applauds House leadership for making passage of this legislation a priority. Despite heated debate, House leadership guided the debate to successful passage. Most of the debate of the bill centered around the impact the legislation would have on education.
“The Missouri Chamber believes that Missouri can support Missouri workers, job creators and education. Missouri does not have to be for one or for the other. We continue to contend that if we hope to move our state forward, we need to change this shortsighted view,” Mehan said. “If we grow our economy, we will be increasing funding for all important state programs, including education.
By delaying implementation of the legislation until 2017, lawmakers are ensuring that education will be fully funded. According to budget projections, the education foundation formula will be fully funded before the cuts would go into effect.
“The argument that this bill would cut funding for state programs is disingenuous and misguided,” Mehan said. “The proposal includes important protections for the state, should the economy falter. The tax cuts would begin in 2017, but only if Missouri’s net general revenues rise by $150 million over the highest level across the previous three years.”
The bill is sponsored by Sen. Will Kraus, a Republican from Lee’s Summit.