A bill eliminating the corporate franchise tax has been approved by the House and sent to the governor.
Only corporations with $10 million or more in assets pay the franchise tax, but Rep. Stephen Webber (D-Columbia) says the $87 million generated annually is vital, especially in lean times such as now when lawmakers have been forced to cut the state budget.
“This bill is simple. It is a tax cut for large corporations located in four counties which will result in less revenue which will hurt people all across this state,” Webber tells colleagues during House floor debate.
Sponsor Jerry Nolte (R-Gladstone) acknowledges he can’t guarantee that corporations will use the savings to expand and create jobs.
“But I can guarantee you this: a dollar that is paid into the state is taken out of circulation and that dollar will not be used for expansion, that dollar will not be used to hire in new employees,” Nolte says.
The legislature in 1999 eliminated the corporate franchise tax for business with $1 million or less in assets and reduced it by a third for all corporations. In 2009, the legislature raised the threshold to $10 million. SB 19 phases the corporate franchise tax out in five years. It passes the House easily. It’s now on Governor Nixon’s desk.