A tax plan has passed out of committee in the Missouri legislature. The measure referred to as “Version 19” by Senator Bill Eigel’s office was originally pre-filed by the Weldon Spring Republican before the current session began.
The measure will compete for bandwidth with an $800 million tax proposal touted by Republican Governor Eric Greitens. The Senate plan calls for the income tax most Missourians pay to be reduced from 5.9 percent to 5.25 percent with a provision that allows for four additional cuts triggered by revenue increases of $150 million over previous years. The income tax rate would bottom out at 4.8 percent.
It allows low-income people to claim a tax credit equal to ten percent of their federal earned income tax credit. The Senate blueprint also lowers the corporate tax rate from 6.25 percent to 4.25 percent.
The measure seeks to raise revenues to offset tax cuts by doing several things. It would limit the individual income tax deduction for federal taxes by installing a sliding scale that gradually lowers and ultimately eliminates the deduction for the highest income earners.
It would also enter the state into the Streamlined Sales and Use Tax Agreement, a national effort partially aimed at generating tax revenues from online sales. And it would cap low-income housing tax credits at $135 million.
The Senate plan calls for 6-cent motor fuel tax to be phased in over three-years, which is a major departure from the Governor’s proposal. Greitens has stated he opposes the fuel tax. The Senate plan still falls short of a recommendation by a transportation task force to hike the gasoline tax by 10-cents to help finance road maintenance.
The Senate proposal and Governor Greitens tax plan have been criticized by both sides of the aisle, but particularly Democrats who think lowering taxes while the state is having to make spending cuts is irresponsible.
The progressive-leaning Missouri Budget Project issued a statement Tuesday afternoon, claiming the measure would result in a net loss to general revenue of $568 million per year when fully implemented.
The Senate tax plan is a combination of three bills from Eigel as well as fellow Republicans Andrew Koenig of Manchester and Bob Order of Lake St. Louis. The merged bill passed through the Senate Ways and Means Committee Tuesday.
Tax legislation is also being considered in the Missouri House.
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