Senate challenges proposed tax cut compromise

The Missouri Senate debated a tax cut bill this week but a vote was delayed as more discussion is needed about the proposal.

Senate Bill 509, sponsored by Sen. Will Kraus, R-Lee’s Summit, would lower Missouri’s personal and business income taxes depending on different criteria.

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 tking@mochamber.com, or by phone at 573-634-3511.

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Missouri House takes on movie and beverage tax credits

This Missouri House Economic Development Committee often takes on very serious issues to promote economic development in the state, and most recently took on two issues that many Missourians love – movies and  drinks.

House Bill 1628, sponsored by Rep. Bart Korman, R-High Hill, would expand the tax credit for wine and grape producers to also include distillers and microbreweries. Missouri’s current law provides tax credits to assist vineyards and wine producers with the purchase of new equipment and materials. This bill would give producers of beer and spirits the same benefits that winemakers currently receive.

House Bill 1451, sponsored by Rep. Kathy Swan, R-Cape Girardeau, would extend the sunset on film tax credits for another six years. The Film Production Tax Credit Program was started in 1999 and has offered credits to film productions for up to 35 percent of their in-state expenditures. Any film-production company with an expected in-state expenditure budget of at least $100,000 for films longer than 30 minutes, and at least $50,000 for films shorter than 30 minutes, is eligible to apply for the tax credits. Only in-state expenditures necessary for the production of the film may be claimed, such as equipment rental, lodging and property rentals and payroll expenditures for Missouri residents. The entire tax-credit program is capped at $4.5 million.

Swan’s district was home to a large film production in the fall of 2013 when 20th Century Fox spent nearly a month in Cape Girardeau filming the 2014 release “Gone Girl” which is based on a novel by Missourian Gillian Flynn.

Both bills were heard in committee but no action was taken.

For more information about tax credits, please contact Tracy King, vice president of governmental affairs for the Missouri Chamber, at tking@mochamber.com or by phone at 573-634-3511.

Missouri Senate considers Angel investment tax credits

Another round of economic development legislation was heard in the Missouri Senate Jobs, Economic Development and Local Government Committee this week, gathering the support of the business community.

Senate Bill 698, sponsored by Kansas City Sen. Jolie Justus, would provide tax credits to investors that provide early stage “angel” capital to qualified employers in the state and would be administered by the Missouri Technology Corporation (MTC) with the primary goal of encouraging individuals to provide seed-capital financing for emerging Missouri businesses engaged in the development, implementation, and commercialization of innovative technologies, products, and services. This bill, unlike many tax credit bills, has a ten year sunset provision.

“You can have a great idea, but without a little bit of seed money or a little bit of assistance, you won’t be able to get the idea off the ground,” Tracy King, vice president of governmental affairs for the Missouri Chamber, said. “This is about investing in individuals and ideas and allowing the entrepreneur to create the newest market and the newest product; this is the basis of all economic development.”

The committee took no action on the bill but may vote on the bill next week.

The Missouri Chamber is supportive of Angel investment tax credits and has testified in favor of similar legislation in the House.  For more information about tax issues, please contact Tracy King, vice president of governmental affairs for the Missouri Chamber, at tking@mochamber.com or by phone at 573-634-3511.

Bill would help emerging businesses thrive

Angel Tax Credits are once again a topic in the Missouri legislature.  Bill 1310 offered by representatives Noel Torpey, R-Independence, and HB 1236 offered by Denny Hoskins, R-Warrensburg, were both heard in the House Small Business Committee on Wednesday.  Both bills would  create tax credits to promote  seed-financing capital for emerging businesses throughout the state.

“This legislation is vital to help us compete with other states,” Hoskins testified. “It also helps to promote entrepreneurship and small business here in the state of Missouri.”

The bills would provide tax credits to investors that provide early stage “angel” capital to qualified employers in the state. The tax credits are equal to 50% of the cash investment made by an investor.  The bills, however, differ in who administers the tax credits.  HB 1236 states the regional Missouri Small Business Technology Development Center must administer the credits, while HB1310 delegates the administration of the tax credits to the Missouri Technology Corporation.   The maximum tax credit allowed is $50,000 for a single, qualified Missouri business, or a total of $250,000 in tax credits in a single year per investor. Both bills are capped at $6 million per year and have a ten year sunset provision.

The Missouri Chamber has had a long-standing position of support for angel tax credits and testified on behalf of the bill. “Missouri is a great state for innovation and entrepreneurship,” King said. “The problem occurs when new incubated businesses get to a particular stage of growth, they’re lured away by states that have the Angel Tax Credits.  We must enact this legislation before we lose more potential businesses to other states.”

For more information about angel credits, please contact Tracy King, vice president of governmental affairs for the Missouri Chamber of Commerce and Industry at tking@mochamber.com or by phone at 573-634-3511.