Missouri taxpayers could be in store for a tax cut beginning in January. Gov. Mike Parson has vetoed a proposed $500 million rebate plan for some taxpayers and plans to instead call a special session sometime this year to have lawmakers work on reducing the income tax rate to about 4.7% or 4.8%.
“The answer to record inflation, high gas prices and increasing grocery bills is not to make the same spending mistakes as the federal government,” said Parson. “In Missouri, we want to provide permanent tax cuts for permanent relief – not temporary stimulus.”
State House Budget Committee Chairman Cody Smith, R-Carthage, led the charge on the proposed tax rebate. Smith told Missourinet he agrees with the governor’s concerns that the plan would have left out some earners.
“I would love to have a permanent tax cut and I certainly think it should be for all taxpayers instead of just some taxpayers based on their income,” said Smith. “And so, I’ve learned through the legislative process in the spirit of compromise, not to let perfect be the enemy of good. House Bill 2090 was the best thing we could get at the time and I was happy to get it.”
Smith said he’s all ears on what the governor has in mind.
“I would love to learn more about what he intends and we’ll certainly go to Jefferson City optimistically looking to do just that. Anytime the governor would like to cut taxes, I’ll be on board with that and look forward to working with him and the Senate to get this done,” said Smith.
He said the devil will be in the details and he wants to get to work on the package as soon as possible.
Under Parson’s plan, he wants to increase the standard deduction allowance and pare down the number of tax brackets. The governor hopes to cut income taxes entirely for individuals who make $16,000 or less in a year or for couples filing jointly who make less than $32,000.
According to Smith, there were also discussions during this year’s legislative session about a tax cut.
“Tax cuts can be very complicated tax policy is very complex,” he said. “And so, conversations about what tax you cut, and how much can oftentimes become very cumbersome, especially in the latter half of a legislative session. So, the idea that we had was more I think of it as a pressure release valve. We had a lot of money in state treasury, a lot of money left over after we crafted the state’s largest budget in the history of the state. And so, I thought House Bill 2090 was a good way to give some tax relief to taxpayers, and then we could get on to the next legislative session next year, where we could potentially look at taking a larger, longer view of a permanent tax cut. And so yes, the discussion was had but it really there wasn’t enough time to put forward a thoughtful package.”
Smith said Missouri has nearly $2 billion of unbudgeted money.
“As we are on the backside of the legislative session, it becomes more clear every day from a revenue perspective, from a budgetary perspective, that we can afford a permanent tax cut. So that’s more clear now than it was even some months ago,” he said.
The overall cost of the package is unknown at this time.
Senate Appropriations Committee Vice Chairman Lincoln Hough, R-Springfield, said he is disappointed that the governor decided to veto what he said could have been “a financial shot in the arm for countless hardworking Missourians.”
“When I first proposed this idea back in February, I couldn’t imagine we would be where we are today with gas prices nearing $5 a gallon and skyrocketing food prices — and its only getting worse,” said Hough. “While the governor’s actions are frustrating and disappointing, I am committed to doing everything I can to provide critical tax relief to every citizen of our great state. Missourians are struggling, and the citizens of our state shouldn’t have to choose between putting gas in their car and putting food on their table. I look forward to working with my colleagues in the General Assembly, as well as the governor, to pass a tax cut in the near future that allows the men and women of our state to keep more of their hard-earned dollars where they belong — in their pocketbook.”
House Bill 2090, sponsored by state Representative Dave Griffith, R-Jefferson City, would have allowed Missouri’s state workers to be paid once every two weeks, instead of semimonthly or monthly.
Parson also vetoed a bill that would have provided two-year extensions to the tax credits under the Missouri Agriculture and Small Business Development Authority, which he says is ‘problematic’. According to the governor, taxpayers see a $2 to $3 return for every dollar invested in programs like this, but he says the short extension would place that return in jeopardy. During the special session, the governor wants the legislature to extend the terms of these tax credits to six years.
To listen to the Show Me Today interview with Missouri House Budget Committee Chairman Cody Smith, click below (14:41).
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