The House has passed its version of legislation Republicans hope will level the playing field for Missouri among neighboring states. The proposal would cut income taxes for individuals and businesses will increasing the state sales tax.
Estimates from legislative researchers say the plan would eventually cut state revenue by $438 million annually. The changes wouldn’t kick in unless state revenue collections grow by at least $100 million year-to-year.
Representative Judy Morgan (D-Kansas City) and other Democrats say the bill will hurt the poor by shifting the tax burden.
“The reduction of the personal and corporate and business income tax, increase of the sales tax, guess who’s going to benefit from that. Not the people that make less than $33,000 a year. They will pay more in taxes because of the sales taxes and the people who will benefit will be millionaires.”
The House handler of the bill, Representative Andrew Koenig (R-Manchester) says the claims the bill will hurt the poor are “false” and “scare tactics.”
“In this bill there’s a $2000 deduction on income tax. We have a sales tax code that is laced with exemptions on the basic necessities of life … on food, gasoline, mortgage, rent, etcetera.”
The plan would cut the top personal income tax rate by two-thirds of a percent over five years. The corporate income tax would be gradually reduced by three-quarters of a percent, while a new 50 percent deduction would be phased in for business income reported on owners’ individual tax returns.
Personal deductions on individual income taxes for those with incomes under $20,000 annually would nearly double and the first $25,000 of corporate income from taxation would be exempted.
The sales tax would be gradually increased by three-fifths of a cent to pay for roads and education. The plan would set aside part of that increase to pay to replace the Missouri State Mental Hospital in Fulton. An amendment added on the House floor would also send part of the increase in sales revenue to the state’s schools.
The House version of the plan includes tax amnesty language that its budget writers and Governor Jay Nixon assume the passage of to balance their budget proposals.
The package passed the House 90-68, well short of the support needed to overturn a veto by the Governor who has opposed an earlier version of the bill. 19 Republicans voted with Democrats against it.
It goes back to the Senate.