Missouri’s state Treasurer is making a mark as a leading champion of tax cuts.
Republican Eric Schmitt of Glendale distinguished himself in the state legislature during the 2014 session when he authored a measure that lowers income taxes starting in 2018.
Last week, he sent an open letter to Missouri lawmakers asking them to not to change current law that binds the state standard tax deduction to its federal counterpart.
The Congressional bill signed into law last Friday by President Trump nearly doubles the standard rate for those don’t itemize their returns.
Schmitt is confident the state won’t take a financial hit from the new law, although some estimates peg a loss in revenue of between $800 million and $1 billion.
The Treasurer bases his optimism on Department of Revenue Director Joel Walters’ prediction that the state could experience a loss of $100 million at most, and could also see a boost of up to $100 million. Walters has been in his position since April as an appointee of Governor Eric Greitens.
At least one Republican state lawmaker has proposed to decouple the state standard deduction from the federal rate out of fear Missouri will otherwise be financially devastated. Senator Bill Eigel added the provision to his own sweeping tax plan after it became apparent Congress had settled on expanding the standard deduction.
Eigel is a first term lawmaker in Jefferson City who entered the scene in 2017 as strident opponent of all new taxes. One of his proposals in the last session prohibited any increase in state spending and reduced income taxes based on growth.
The new law increases the standard deduction for single filers from $6,500 to $12,000. For married couples it rises from $13,000 to $24,000. And for people who file as a head of household, the standard deduction moves upward from $9,550 to $18,000.
Schmitt contends keeping the state’s rate tied to federal allowance will bring positive economic results.
“By nearly doubling the standard deduction we can provide more tax relief to hardworking Missourians from all walks of life,” wrote Schmitt in his open letter. “This will help to amplify the positive impact of the tax relief I championed with many of you when I served in the Missouri Senate, which is set to begin phasing in next year.”
Under the law Schmitt authored, individual income taxes drop by one-tenth-of-one percent, and those on small businesses are lowered by 5%, if revenue collections in a year exceed any of the three previous years by $150 million.
The scenario played out in the last Missouri fiscal year which ended in June, so the reductions start in January. As it stands, Missourians will see their income taxes reduced from 6% to 5.9% beginning in January, while small businesses (that file through the individual income tax structure) will see their rates drop to 5.5%.
But the growth in revenue that triggered the tax cut wasn’t enough to offset an even bigger increase in state expenses. Governor Greitens signed a budget in June that withhold $250 million from state services.
Still, Schmitt contends the tax cut will fix the budget problem because it’ll bring more spending to grow the economy.
“We have a growth issue in this state,” Schmitt said in July. “It’s my personal belief, and the belief, I think, of a lot of folks out there that we’re going to grow jobs by lowering the tax burden on working families. And lowering the tax burden on small businesses so that they have more of their own money.”
Schmitt has been a relentless supporter of cutting taxes on the national level as well as here in Missouri. In September, he wrote a guest column in the conservative political website the Daily Caller in which he called on Congress to cut taxes.
In it, Schmitt praised President Trump’s speech earlier the same month in Springfield which gave a general outline of proposed changes to the tax code. He called Trump’s plan “tax reform that is pro-growth, pro-American and pro-worker”.
Last month, Schmitt traveled to Washington D.C. to meet with members of the Trump administration. During the visit, he was scheduled to speak with cabinet members, including Agriculture Secretary Sonny Perdue and Small Business Administrator Linda McMahon, as well as the National Economic Council.
Schmitt even stumped on national TV in support of the tax plan just signed into law by President Trump. In late November, he spoke about the need for tax reform on Fox Business Network’s Varney and Company with Stuart Varney.