The state House has passed two proposals for cutting taxes along very similar party-line votes.
The bill sponsored by Representative T.J. Berry (R-Kearney) would cut corporate income taxes in half and allow half of business income reported on personal taxes to be exempted. Legislative researchers estimate the bill would cost the state up to $347-million annually.
Berry says his proposal will spur job creation.
“What House Bill 1253 is about,” Berry tells colleagues, “is incentivizing the creators so that we grow, and when they grow I guarantee you everyone else gets an opportunity also.”
The other bill, sponsored by Representative Andrew Koenig (R-Manchester), would include the exemption for business profits reported as personal income and would cut individual income tax rates along with an exemption for lower-income Missourians. General revenue would have to grow by $100-million to $150-million in order for the cuts to take effect. Legislative projections are that the bill could cost the state up to $703-million by 2021.
“This is a reasoned approach and it will make our state more competitive,” said Koenig.
Every House Democrat present for both votes voted against the proposals.
Representative Margo McNeil (D-Florissant) says testimony during a committee hearing on Berry’s bill indicates Missouri already has a competitive tax policy.
“We had testimony in that committee that said Missouri was the third best state in the nation for corporate income tax. I’ve also heard seventh best. In other words, we already have a pretty good tax rate for corporations in this state.”
McNeil says legislators shouldn’t be pushing tax cuts with other funding needs, such as in mental health, drug rehabilitation centers and education.
She tells lawmakers the foundation formula for K-12 education funding is, “still $550-million under-funded from what, statutorily, we were to be.”
Both bills received 106 votes, well above the 82 required to pass in the House but just shy of the 109 that would be needed to override a gubernatorial veto. Governor Jay Nixon (D) vetoed a tax cut bill last that came down to a close, failed override attempt in the veto session, when 15 Republicans sided with Democrats in voting to sustain that veto.
Governor Nixon issued a statement denouncing the bills as, “fiscally irresponsible experiments that would funnel nearly a billion dollars out of our classrooms and other priorities.”
Both bills have been sent to the Senate.