The Missouri House has given initial approval to a sweeping tax plan a week after the Senate did the same with its version.
The House proposal from Republican Speaker Pro Tem Elijah Haahr of Springfield offers a deeper immediate individual income tax reduction. It cuts the rate most Missourians pay from the current 5.9%-to-5%, while the Senate blueprint slices the rate to 5.2%.
The House plan also more sharply reduces the corporate income tax from 6.25%-to-5% versus the upper chamber’s drop which settles in at 5.25%.
Like the Senate plan, the House proposal from Haahr attempts to claw back revenue losses from the cuts by eliminating a calculation that allows multi-state corporations to pay fewer taxes in Missouri. It also phases out state deductions for federal income taxes beginning in 2019.
In addition, Haahr’s bill eliminates the renter’s portion of a tax credit for low-income seniors, a move favored by Republican budget leaders in the House.
The House and Senate proposals both seek to raise money for roads, but in much different ways. While the Senate plan hikes the motor fuel tax, Haahr’s House version raises vehicle user fees by indexing them to the cost of inflation.
Several amendments were added to the House blueprint Wednesday, including one that would offer a state deduction for a loan forgiveness program at the federal level.
Haahr, who has filed no other legislation in the current session, says his bill would transform Missouri’s tax system to the most competitive in the nation.
Both the House and Senate plans need one more vote before they can advance to the other chamber.
They will likely receive much more scrutiny if they’re to have a chance at becoming law. Republican majority leadership in the Senate has expressed apprehension over additional tax cuts after one previously passed in 2014 went into effect this year.
They’re also concerned how the state plan would interact with far-reaching tax legislation passed by Congress late last year.
Lawmakers on both sides of the aisle have cautioned that Missouri needs to be cautious with any tax plan after deep cuts in neighboring Kansas devastated that state’s budget.
House Assistant Minority Leader Gina Mitten, D-St. Louis, recently suggested the GOP tax plans in both state chambers are meant to score political points.
“We’ve already talked about the fact that our public education is in trouble, our roads and bridges are in trouble, our seniors are in trouble, what more trouble do we need to put Missourians in just to win elections,” Mitten says.