by Nick Thompson
The Missouri House passed a bill Wednesday, April 24, that legislative staff estimate ultimately could take more than $400 million per year out of the state’s core budget.
The measure would cut the state income tax, cut the corporate tax, cut business income taxes and raise the sales tax.
Rep. Doug Funderburk, R-St. Charles County, said an income tax cut creates a “rising tide” in economic growth because it allows workers and business owners to keep more of what they earn.
The legislation, sponsored by Sen. Will Kraus, R-Lee’s Summit, was already passed by the Senate. The House amended the bill to direct some of the increased sales tax revenue to fund roads, schools and a new state mental hospital at Fulton. The amended version would raise the state sales tax from its current rate of 4 percent to 4.6 percent.
The bill would reduce the state’s top individual income tax rate from 6 percent to 5-1/3 percent and would reduce the corporate rate from 6-1/4 percent to 5-1/2 percent. The bill would also allow business owners who file their business income on their individual state returns to deduct 50 percent of the income beginning in 2018.
The bill phases in the tax cut provisions by scaling back the rates beginning in the 2014 tax year and ending in the 2018 tax year.
Rep. Jon Carpenter, D-Clay County, said the bill is “voodoo economics” and doubts the change in tax policy will generate enough revenue.
“I doubt literally a single person will make the decision to come and live in Missouri because we’ve taken the income tax rate from 6 percent to 5-1/3 percent,” Carpenter said.