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.

House acts on bills to cut Missouri tax rate

Proposals to cut taxes for Missourians were given preliminary approval by the House of Representatives this week.

The 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.

The tax cut proposals are contained in House Bill 1253, sponsored by Rep. T.J. Berry, R-Kearney, and House Bill 1297, sponsored by Rep. Andrew Koenig, R-Manchester.

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 bills are a continuation of a discussion from last year.  The Missouri Chamber of Chamber of Commerce and Industry, along with legislative leaders, has pushed for meaningful tax reduction to bolster economic development and help Missouri remain competitive with other Midwestern states which are also aggressively cutting taxes.

The Missouri General Assembly succeeded in passing a broad tax cut last year. However, it was vetoed by Gov. Jay Nixon. An attempt to override the veto during a special session narrowly failed.

This year, there are a number of proposals being considered. The Missouri Chamber continues to support broad based tax relief for Missouri businesses and all Missourians.

“The proposals we are working on this year offer aggressive tax relief to all Missourians, freeing up greater resources for businesses and individuals to invest in our economy and job creation,” said Tracy King, Missouri Chamber vice president of governmental relations. “At the same time, these bills protect our state’s important investments in areas such as education. We continue to advocate for an approach that both reduces our tax burden while providing adequate funding to help ensure our students are receiving the education they need for tomorrow’s economy.”

For more information, please contact Tracy King at tking@mochamber.com or by phone at 573-634-3511.

Déjà vu: Corporate tax relief receives early hearings

While the bill number may be a coincidence, the fact that tax relief is among the first bills to receive hearings in the 2014 Legislative Session is not.  House Bill 1253 was among three tax cut bills heard by the House Committee on Ways and Means this week – legislation containing corporate tax relief provisions similar to the much publicized House Bill 253 of the 2013 Legislative Session.  House Bill 253 was vetoed by Gov. Jay Nixon, a veto that narrowly escaped override following a multi-million dollar campaign in support of the tax cuts.  Republicans vowed going into the 2014 Session that tax relief would be a leading issue.

House Bill 1253, sponsored by Rep. T.J. Berry, is like HB 253 in that it would phase in a reduction of the corporate income tax, however, there are also significant differences in the bill.

HB 1253 does not require nearly as much revenue growth to trigger cuts as were contained in HB 253.  House Bill 1253 would phase in cuts over five years, taking the corporate income tax from 6.25 percent to 3.125 percent.  Each year the cuts would go into effect if revenue growth remained the same or increased.

Unlike HB 253, the legislation does not include the Streamlined Sales Tax language that caused so much controversy in 2013.  Tax amnesty provisions are also left out of HB 1253.

“It’s refreshing to be having the discussion about tax policy and whether this is a policy that will help Missouri grow as the Missouri Chamber believes broad-based tax relief for employers would do,” testified Tracy King, Missouri Chamber vice president of governmental affairs.  “Last session, so much time was spent pitting education against business that this point was lost.”

King emphasized that in order to grow our state’s economy and state funding for important services, we need to remain competitive and keep up with the majority of states that have cut corporate taxes in recent years.

“The Missouri Chamber believes that our state can provide employers relief and fund education,” King said.  “It shouldn’t be either, or.”

During the hearing the committee also heard testimony on two additional bills aimed at cutting taxes:  House Bill 1295 and House Bill 1297.  Both bills are sponsored by Rep. Andrew Koenig.

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.