Missouri House Republicans advance bill cutting corporate, individual income taxes

Roughly five months after Missouri approved the largest tax cut in state history, the GOP-controlled House on Tuesday advanced legislation that would further lower the state’s income tax rate and cut taxes on corporations.

The bill, sponsored by state Rep. Dirk Deaton, a Noel Republican, passed 109-45. It would lower the top state income tax rate from 4.95% to 4.5% starting next year. It also cuts the corporate income tax rate from 4% to 2% next year and allows for future cuts if revenue allows.

The top state income tax rate applies to Missourians who make roughly $22,000 or more a year. The legislation, which is expected to cost the state more than $1 billion once fully implemented, needs one more vote in the House before it heads to the Senate.

Democrats and budget analysts have excoriated the tax cuts, saying they would primarily benefit wealthy Missourians and corporations. They say Republicans are prioritizing tax cuts over government services less than a year after lawmakers already lowered the income tax rate.

“We did just have the largest tax cut in the history of Missouri,” said state Rep. Deb Lavender, a Manchester Democrat. “Why are we trying to do that again when we finally have the opportunity to invest in Missourians, to increase our educational level, to increase provider services for people?”

Republicans have championed the tax cut as a way to increase economic growth. They also argue that cutting the corporate income tax would entice companies to come to Missouri.

“The state should not take a dime more than what we need to provide for essential services,” state Rep. Doug Richey, an Excelsior Springs Republican, said on the floor. “This is not reckless”

Last October, Missouri Gov. Mike Parson, a Republican, signed into law legislation that lowered the state’s top income tax rate from 5.3% to 4.95%.

While Parson and Republicans touted the proposal as helping Missourians struggling with inflation, an analysis of the plan by the Missouri Budget Project, a nonprofit that analyzes fiscal policy, found that the tax cut would leave out one-third of Missourians.

It also found that taxpayers making $22,000 or less would each receive an average cut of $3, while those in the top 1% would receive an average cut of $4,214 next year.