The Missouri Senate has given initial approval to a far-reaching tax plan which would cut rates of both individuals and corporations.
The measure, which is a combination of blueprints from three senators, would lower the income tax most Missourians pay from 5.9% to 5.25%. The Corporate rate would drop from 6.25% to 5.25%, a smaller decrease than the reduction to 4.25% that was previously in the legislation.
The measure seeks to raise revenues to offset tax cuts by lowering individual and eliminating corporate income tax deductions for federal taxes. It would also enter the state into the Streamlined Sales and Use Tax Agreement, a national effort aimed at generating tax revenues from online sales.
In addition, the plan would gradually raise the state’s motor fuel tax by 6 cents over a six-year period with triggers to increase it to as high as 25 cents per gallon. A provision to limit low-income housing tax credits to $135 million has been dumped from the measure.
The sweeping tax plan received its initial approval with only two amendments and relatively little discussion.
Opposition from interest groups over some features of the proposal could cloud its final approval as the Senate is required to vote on the measure one more time before sending it to the House.
The tax plan’s chief spokesperson, Republican Bill Eigel of Weldon Spring, contends that triggers in the income tax reduction will prevent the state from experiencing the perils neighboring Kansas has gone through.
Democrats often bring up Kansas as a warning sign for what could happen in Missouri if large tax cuts are implemented. The Republican-controlled Kansas Legislature repealed deep income tax cuts engineered by GOP Governor Sam Brownback in 2017 after years of devastating revenue shortfalls.
The Senate blueprint may have to compete with a separate tax plan moving through the House from Republican Speaker Pro-Tem Elijah Haahr of Springfield. Among other things, it raises money for roads not through a hike to the fuel tax as in the Senate bill, but by indexing vehicle user fees to the cost of inflation.