JEFFERSON CITY, Mo. – The Missouri Senate on Tuesday sent a $690 million tax cut bill to the House with a 23-9 vote.
The bill, sponsored by Sen. Will Kraus, R-Kansas City, is drastically different from how it started. The legislation would reduce the maximum tax rate on personal income by one-half of a percent to 5.5 percent beginning of 2017 and reduce corporate taxes by 25 percent. Both provisions would be contingent on state revenues being $150 million higher than the year prior.
The bill was developed in reaction to the failure to pass another tax cut bill – House Bill 253 – last year. Despite its reduced size, Democratic Gov. Jay Nixon said on Tuesday he is still opposed to the bill because of its potential to cut state revenues, and in turn, education funding.
“It is interesting that the amount of the tax cut is the amount of money it would cost to fully fund the foundation formula and fully invest in higher education that would freeze tuition this year,” he said. “It’s only the first of April. We have time to work.”
But, Nixon added, “as it sits right now, I don’t believe the bill as crafted is in the best short or long-term interest.”
Nixon said tax credit reform should be part of the discussion, and any bill passed should be contingent on full funding for the state’s K-12 foundation formula, which has been under funded for several years.
“I’ve signed four tax cuts and I’m not opposed philosophically to doing that,” he said. “We need to be able to meet the make the obligations we have to our school kids — we need to fully fund the formula.
“We’re within sight of it now, it was passed in 2005 by a Republican legislature and signed by a Republican governor, we’re in sight of getting it funded. We need to finish that commitment to schools,” he said. “One of the challenges here is you don’t want to finish the commitment to schools and have a bill that makes it impossible to do that the next year. That’s the challenge of where they are right now. But we’ll continue to have discussions and we’re a long way from the finish line.”
Kraus, speaking ahead of Tuesday morning’s vote, said he believed it was time for the state to move on an income tax reduction for the first time since the 1930’s.
”This bill is a people’s tax cut, to send taxpayer dollars back to the people and put more money in the economy,” he said.