The Missouri Senate debated a tax cut bill this week but a vote was delayed as more discussion is needed about the proposal.
For example, Sen. Kraus’ proposal would cut the state’s 6 percent income tax rate by a quarter percent. But it would only happen if revenues increase by $200 million and if schools are fully funded.
Likewise, businesses would receive a new 25 percent deduction on the first $100,000 of certain business income dependent on whether the General Assembly passes new laws to limit tax credits. The same trigger would bring an extra .15 percentage cut to those who pay the top income tax rate.
Sen. Kraus has promoted the proposal as a compromise. Last year, the General Assembly passed tax cut legislation that was vetoed by Gov. Nixon. However, Gov. Nixon has hinted he would approve the language Rep. Kraus is currently proposing.
“I believe this meets the group goal of broad-based tax reform,” Sen. Kraus said. “I believe the triggers are reachable and well within our means to be able to do over the next couple years and meet our obligations for education.”
During discussion on the bill, some senators expressed concern that the bill places too many conditions on the tax cuts. Other senators remained apprehensive that the tax cut could undermine existing state programs and lead to funding challenges in future years.
The bill did not reach a vote in the Senate.
SB 509 is just one option the General Assembly is considering this year as lawmakers work toward cutting taxes.
The Missouri House has already passed House Bills 1253 and 1297, sponsored by Rep. T.J. Berry, R-Kearney, and Rep. Andrew Koenig, R-Manchester, respectfully. These House bills would reduce the amount of business income taxed by 50 percent and cut the state’s corporate tax rate from 6.25 percent to 3.125 percent. Also on the table is reducing the individual income tax rate from 6 percent to 5.3 percent. All of the proposed tax cuts would be phased in gradually over several years. The bills also contain wording that would protect important state functions, such as education, from the possibility of reduced funding. The tax cuts would only be triggered in years when there was either stable tax revenue or revenue growth.
The proposal by Reps. Berry and Koenig awaits a committee assignment in the Senate.
As lawmakers consider the many options on the table, the Missouri Chamber will continue supporting broad based tax relief for Missouri businesses and all Missourians.
For more information on tax issues, contact Tracy King, Missouri Chamber vice president of governmental affairs, at email@example.com, or by phone at 573-634-3511.