October 22, 2014

Nixon vetoes tax bill

Governor Nixon has vetoed a bill that mistakenly would have eliminated the sales tax exemption for prescription drugs.  The bill would have provided the first income tax cut for Missourians in decades while also cutting corporate taxes.

Nixon says the income tax cut would have endangered state funding for schools and higher education.

The bill contained a couple of things Nixon asked the legislature to approve at the start of the legislative session–a tax amnesty program and Missouri participation in a multi-state effort to collect sales taxes on internet purchases. 

“Therein lies the problem of mashing many concepts together and sticking them in bills,” Nixon said.

In his six-page veto message, Nixon calls the bill “an ill-conceived, fiscally irresponsible experiment that would ineject far-reaching uncertainty into our economy, undermine our state’s fiscal health, and jeopardize basic funding for education and vital ;public services.”

Supporters of the measure said it would allow Missouri to remain competitive with neighboring states, particularly Kansas, that have cut taxes to encourage economic development. However, Nixon pointed to a letter from the Civic Council of Greater Kansas City, an organization of business CEOs, supporting the veto.  Council Chairman Donald J. Hall wrote, “Missouri has already drastically cut state services, increasing class sizes, raising college tuitions, and deferring maintenance on Missouri’s roads and bridges.  Further tax cuts will only make matters worse, and do nothing to create jobs or make businesses more competitive.” 

President Dan Mehan of the Missouri Chamber of Commerce says Nixon’s veto takes away “one of the strongest economic development tools that our state could have put to work.”

Another business group, Associated Industries of Missouri, calls the bill “the kind of common sense tax reduction that Missouri needs to compete with bordering states.” 

Hall, in his letter, says the Council believes the bill would “result in significant loss of state general fund revenues and necessitate drastic cuts to funding for education…social services and infrastructure…Tax cuts are not advisable, particularly in light of the state’s inability to adequately fund basic operating needs and services.”

Nixon noted, he has supported other tax cuts in the past.

“We have made targeted tax cuts since I have been governor.  On three separate occasions – we got rid of the franchise tax, phasing that out to help small businesses, we put in place a temporary tax deduction for small businesses adding jobs and we are in the process of phasing out the income on military retirees pensions so as the military downsizes, those folks will come to Missouri and start a new career here.”

Supporters of the bill say they will try override Nixon’s action during the September veto session. 

Nixon’s veto message: http://governor.mo.gov/newsroom/pdf/2013/HB253veto.pdf