Income tax cut advances in Missouri Senate
By Virginia Young email@example.com
JEFFERSON CITY • Spurred by tax cuts in Kansas, the Missouri Senate took the first step Wednesday night toward cutting state income taxes.
A bill that won first-round approval would reduce Missourians’ individual income taxes and corporate income taxes by 0.75 percent over five years. For example, instead of 6 percent, the personal income tax rate would be 5.25 percent.
Also, businesses that report company income on owners’ personal returns would get a phased-in, 50 percent deduction.
To offset part of the loss, the state sales tax gradually would be increased by 0.5 percent. Also, Missouri would try to tax online sales.
Supporters said the changes are needed to keep firms from moving to Kansas, which has eliminated income taxes for thousands of small businesses and lowered individual tax rates.
Sponsoring Sen. Will Kraus, R-Kansas City, estimated that the tax cut would cost Missouri’s treasury $450 million a year when phased in. But he said economic growth would offset the loss.
His figure was disputed by opponents, who put the price tag at nearly $700 million. They said the state needs the money for schools, roads and other services. “I truly believe we’re taking a leap and we don’t know where we’re going to land,” said Sen. Jamilah Nasheed, D-St. Louis.
In one concession, Kraus agreed to increase the personal exemption by $2,000 for individuals with adjusted gross income of less than $20,000.
The bill is SB26.