The Missouri Chamber questions Gov. Jay Nixon’s veto rhetoric

This week, Gov. Jay Nixon rolled out another wave of rhetoric and threats about legislation passed in the 2014 Legislative Session, signaling upcoming vetoes to several tax reform bills.  The Missouri Chamber of Commerce and Industry criticized Gov. Nixon’s vague statements and questionable cost estimates.

Chamber President Dan Mehan

Chamber President Dan Mehan

“We hope that reporters will ask the governor to back up his claims of the costs of this legislation, because his numbers don’t add up,” said Dan Mehan, Missouri Chamber president and CEO.  “For starters, how can letting employers know ahead of time how a change in tax policy would impact them cost $100 million annually? Do we want to be a state where ambushing employers is a strategy for adding $100 million annually to the state coffers?”

Governor Jay Nixon

Governor Jay Nixon

Missouri’s tax collectors at the Department of Revenue write the state’s tax rules. Lately, the department has been changing the rules that relate to sales tax collection. The problem is that the DOR often doesn’t inform impacted businesses about the changes.

“The DOR is actually penalizing businesses for not following the rules they didn’t tell anyone about,” Mehan said.  “It is causing some businesses to close their doors, because they can’t afford the back taxes and penalties.  Any reasonable person would see that this is poor policy that should be changed.”

Senate Bill 662, sponsored by Sen. Kraus, will require the Department of Revenue to notify businesses when they make a change in their interpretation of the state’s sales tax laws. No longer will the state be able to change the rules without informing impacted businesses.  That provision is also contained in Senate Bill 584, sponsored by Sen. Bob Dixon.

The DOR also changed the intent of legislation passed in the 2013 legislative session that gave corporations a more advantageous method for filing taxes.  In Senate Bill 662, the true intent of the 2013 law was codified.  Yet the governor is claiming that holding the DOR to what the legislature intended will cost an additional $15 million annually.

The most disingenuous claims by the governor, however, center around his rhetoric of economic development incentives contained in some of the bills he promised to veto.  The governors’ comments ring ironic, after a session where he remained silent on the issue of economic development.

“If Gov. Nixon would seriously engage with lawmakers about economic development legislation during the legislative session, rather than wait until the session is over to find fault with other peoples’ ideas, he could reduce the number of times he uses his veto pen,” Mehan said.  “And, we would not have let another legislative session go by without an economic development bill.”

Senate Bill 584 contained a number of economic development incentives, including a tax exemption to attract more data centers to our state.

“Technology is the future,” Mehan said.  “One way Missouri can capitalize on the growth of this data-driven economy is by becoming a great state for data center development. Data center construction is growing exponentially and is expected to be $15 billion over 3-5 years. Companies are looking for sites now to build out data centers.  We can either provide attractive incentives to position Missouri well for this opportunity, or stand by and watch these companies locate in other states.”

Data center incentives were discussed at length during the governor’s 2010 Strategic Initiative for Economic Growth and was identified as a niche within the Information Technology Target Cluster as important to Missouri’s economic future.  In fact, an analysis done by the Department of Economic Development which was included in the Strategic Initiative shows that the data center industry has strong multiplier effects in terms of creation of additional jobs and wealth.

This change of heart is another reason the Missouri Chamber questions the governor’s message.  He claims that the provisions contained in legislation like SB 584 are new ideas.  This is also false.  This legislation was pre-filed and the provisions within have been discussed for years.

“It’s easy to throw out inflated numbers and blame special interests, when no one questions the governor,” said Mehan. “Gov. Nixon would rather fight the General Assembly than work with them as a leader.”

 

Taxpayers should demand a fact check of Gov. Nixon’s anti-tax cut message – By Daniel P. Mehan, Missouri Chamber President and CEO

Following the Missouri House passage of Senate Bill 509, Gov. Jay Nixon wasted no time decrying the bill. Here are the facts: Senate Bill 509 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 changes would not take effect until 2017, and only if Missouri’s net general revenues rise by $150 million over the highest level across the previous three years. Every worker in the state and many small businesses would benefit from the first broad-based tax relief in nearly 100 years.

The governor’s message strays from the facts and echoes his previous attacks on providing Missourians tax relief. On behalf of the small business members we represent and workers they employ – all of whom would benefit from this tax relief – we need to set the record straight.

First, it is especially troubling to see Gov. Nixon successfully framing the issue in the media as a tax cut for “lobbyists and lawyers.” What about the farmers, barbers, daycare owners, pet groomers, carpenters, and thousands of other categories of small business owners who would benefit from this tax cut? What about the factory workers, truck drivers, teachers, and other hard-working Missourians who would benefit by keeping more of their paychecks? Why doesn’t he mention these taxpayers when talking about the bill? Maybe he hopes they won’t notice.

Even more deceiving is the governor’s line that this legislation is an attack on education and would cut education funding. The legislation delays implementation of the tax cut until 2017, when the governor’s own projections show that the education foundation formula will be fully funded. The tax breaks will not go into effect unless $750 million in additional funding comes into state revenue. How can the governor say education will receive less funding, when simple math shows the opposite?

But, the governor has not stopped there. Now he says the bill would eliminate nearly all of Missouri’s income taxes, although most legal experts and even a former Missouri Supreme Court Chief Justice have said that is not the case.

Using this rationale to veto the bill is disingenuous. Clearly, this was not the legislative intent of the bill. Even if the courts find a problem with the legislation, the language could be fixed long before the tax breaks go into effect.

We should not lose the momentum for this opportunity to give Missourians a much-deserved tax break and better position our state among our neighbors. Six of the eight states bordering Missouri have made moves to cut taxes. Eighteen states cut taxes last year alone. In a decade, we will see the difference in the economies of those states that have established aggressive, taxpayer-friendly policy and those states that stood still. We are being left behind by states that have embraced reform. Instead, in Missouri, our governor is spending taxpayers’ dollars flying around the state and holding press conferences rather than allowing them to keep a small amount of what they paid into Missouri’s surplus. At the very least, we hope that taxpayers, reporters and legislators will see through the rhetoric.