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Momentum builds for Missouri tax reform

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Sen. Eigel (left) and Sen. Koenig (right) present their tax reform bills on Jan. 16.

Two tax reform Senate bills were discussed in committee on Jan. 16 which are designed to reduce the tax burden on businesses and individuals in Missouri to grow the state’s economy and competitiveness.

Senate Bill 611 is sponsored by Sen. Andrew Koenig, a Republican from Manchester.

Main provisions of SB 611 include:

  • Reducing the corporate income tax rate from 6.25 percent to 4.25 percent
  • Reducing the individual income tax rate
  • Increasing motor fuel tax by four cents per gallon
  • Entering the Streamlined Sales and Use Tax Agreement
  • Requiring the Department of Revenue to submit an annual tax credit program report to the General Assembly
  • Capping the low income housing tax credit at $60 million annually
  • Capping the historic preservation tax credit at $30 million annually

“We should have a tax system that is transparent, neutral, simple, maintains a broad base and one that is stable. The problem is, our current tax system fails to meet these criteria,” said Koenig. “The no-income-tax states are winning on the most important economic indicators including domestic migration, gross state product and state tax receipts growth.”

Senate Bill 617 is sponsored by Sen. Bill Eigel, a Republican from St. Charles.

Main provisions of SB 617 include:

  • Eliminating the top two and bottom four income tax rate brackets and reducing the remaining income tax rates
  • Gradually further reducing income tax rates annually by 0.1 percent if general revenue collections equal or exceed that of the previous year, until the rates eventually reach zero percent
  • Increasing motor fuel tax by six cents per gallon
  • Entering the Streamlined Sales and Use Tax Agreement
  • Capping low income housing tax credit at $135 million annually
  • Capping all tax credits at $425 million annually

Eigel said his bill is “an attempt to model Missouri’s tax code after some of the most successful tax codes that we’ve seen in our laboratories of democracy in the United States.”

In his recent State of the State speech, Gov. Eric Greitens called for tax reform in Missouri this year. The governor released an outline of the principles for his state tax reform plan on Jan. 18, which include cutting taxes for working families and lowering taxes on businesses to create more jobs. In the coming weeks, the statement said, a detailed plan will be published and the governor will begin working with the general assembly to draft legislation.

The Missouri Chamber of Commerce and Industry is a strong supporter of the push for tax reform this year.  The Missouri Chamber will work closely with lawmakers to help craft a reform bill that will improve the state’s competitiveness and help grow the state’s economy.

“Overall, the Chamber does support reductions in the individual and corporate tax rates. We think those are the best ways to spur more growth here in the state,” said Matt Panik, vice president of governmental affairs at the Missouri Chamber.

The Missouri Chamber also supports the fuel tax increases and the creation of an annual tax credit accountability report.

At the hearing, the sponsors said state spending cuts would not be required because the legislation strikes a balance by reducing both taxes and tax credits, and that state revenue would be boosted by the economic growth the tax cuts would produce.

For more information, contact Panik at mpanik@mochamber.com or 573.634.3511.

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