Gov. Mike Parson visits Columbia to promote proposals for income tax cuts and ag credits

Citing the largest revenue surplus and the lowest unemployment rate in state history, Gov. Mike Parson on Thursday told a Columbia audience that now is the time to provide relief to Missourians.

Parson made his pitch at Clary-Shy Park, home of the University of Missouri Health Care Pavilion and Columbia Farmers Market, where he was introduced by Columbia Mayor Barbara Buffaloe.

He hopes to get his proposals approved in a special session starting after Labor Day.

"The bottom line is this: If we can't deliver relief to farmers and Missouri taxpayers, we need to pack our bags and go home," Parson said.

Parson this week announced the session, which will be focused on a combined piece of proposed legislation that includes income tax cuts and the extension of agriculture tax credit programs for at least the next six years.

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Top individual earners would see their tax rate cut from 5.3% to 4.8% under the plan, and the bottom tax bracket would be eliminated, Parson said.

It would be "the largest decrease in income tax in our state's history," he said.

Parson wants to increase the standard deduction to $2,000 for single filers and $4,000 for those filing jointly.

Under Parson's plan, according to information provided by his office, seniors making $20,000 or less per year would have no income tax liability. Single adults making $25,000 would see an income tax reduction of 32%, while a single parent of two children making $35,000 would see a 21% tax reduction. A married couple's combined income of $125,000 would see an 11% tax reduction.

The first $16,000 in income for a single filer would not be taxed, while a couple filing jointly would not be taxed on the first $32,000. If their income is under that, they would have no state income tax.

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"The whole package is about $700 million," Parson said.

The tax credits for farmers Parson seeks to create or extend include:

• Extending the expiration date of the meat processing facility investment tax credit program;

• Creating tax credit programs for retail dealers of higher ethanol blend fuels, for retail dealers of biodiesel, and for Missouri biodiesel producers;

• Creating a tax credit program for establishing or improving urban farming operations;

• Extending the expiration of the Rolling Stock Tax Credit program;

• Extending the expiration of the Agricultural Product Utilization Contributor Tax Credit;

• Extending the expiration of the New Generation Cooperative Incentive Tax Credit;

• Exempting utility vehicles for agriculture use from state and local sales and use taxes;

• Creating the Specialty Agricultural Crops Act; and

• Amending the Family Farms Act to modify the definition of small farmer.

Because of inflation, farmers are facing higher diesel prices, higher fertilizer prices and higher feed prices, Parson said.

The proposed tax credits treat farmers like every other business, Parson said.

Parson vetoed an agriculture tax credit bill last year, a decision he said was due to it having a two-year sunset clause instead of the six years he felt was necessary.

"Frankly, you can't even implement a lot of the things that we want to do in two years," Parson said.

The veto was "one of the toughest things I have had to do in my tenure as governor," Parson said during his public remarks Thursday. "... As a farmer myself, that's very difficult when I've supported it my entire career. Probably disappointed, probably hurt a few feelings along the way."

"(This special session) is to fix what didn't get done last year," Parson added.

The tax cuts and credits are sustainable for the long term, Parson told reporters.

"We've run the numbers out five to seven years," Parson said. "Nobody can predict the future much past that."

University of Missouri economics professor Joe Haslag on Wednesday said Missouri's revenue can handle the proposals.

"There will be some benefits that go with the lower tax rates in Missouri," Haslag said. "The second point is the economic growth impact is not going to be substantial."

Parson is playing to his base, as President Joe Biden did Wednesday by forgiving some  student loan debt for borrowers, Haslag said.

The second-term Republican governor, who is seeking the state's third tax cut under his administration, echoed his remarks made earlier this week that the flood of federal dollars from the American Rescue Plan Act and other measures was not taken into consideration when evaluating the health of the state's coffers going forward.

The Missouri Budget Project, a public policy organization that studies budget issues, has called the proposed tax cuts "irresponsible," arguing that the influx of federal funds had in part fueled the state's current surplus.

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State Rep. Crystal Quade, leader of the House Democrats, said in a statement this week that Parson's plan was a "ploy to change the subject" after Missouri banned abortion and that it was "a textbook example of fiscal irresponsibility" that would "jeopardize the state's financial future" and "benefit the wealthy."

"We are still going to be able to do that $700 million," Parson countered Thursday, referring to the lost tax revenue associated with his plan. "We're still going to have discretionary spending. We're still going to be able to keep all of the programs that we started in play and be able to totally fund them. And we're going to continue to have money left over on the bottom line."

Parson said this earlier week that his office had spoken to "think tanks on both sides of the aisle" and many will believe the cuts go too far or don't go far enough.

The tax cuts and credits won't take away from anything the state is doing, Parson said. He cited the highest funding of education in state history, including "universities, community colleges and K-12," and school transportation funding.

"We're doing the right thing for the people of the state of Missouri," Parson said.

The Tribune's Charles Dunlap and the Springfield News-Leader's Galen Bacharier contributed to this report.

Roger McKinney is the education reporter for the Tribune. You can reach him at rmckinney@columbiatribune.com or 573-815-1719.

This article originally appeared on Columbia Daily Tribune: Gov. Mike Parson says time is right for tax relief for Missourians