New round of tax cuts to income, corporate rates passes Missouri House
JEFFERSON CITY — A package of tax cuts that further reduce Missouri's income tax rate, slash the corporate income tax by half and exempt Social Security payments from income tax passed the state House on Thursday.
The proposal comes months after the Republican-led legislature made the largest income tax cut in the state's history, and as members look for more paths to relieve tax burdens as the state touts a surplus of dollars. The tax package now heads to the Senate, which has been considering several other tax cut proposals.
Rep. Dirk Deaton, a Noel Republican sponsoring the package of cuts, called them "significant," totaling more than $1.6 billion when fully implemented. He acknowledged that the cuts would in the short term reduce revenue the state receives to fund services.
"We've got a $5 billion-plus surplus in the treasury at this moment," Deaton said. "I've had people suggesting we should just spend less money. The way you spend less money in state government is by cutting taxes, by limiting the amount of revenue that comes into Jefferson City. That's the only way."
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Under the bill, the top individual income tax rate would decrease from its current 4.95% to 4.5% starting on Jan. 1, 2024. If the state finishes a future fiscal year with a large enough revenue surplus, another gradual cut would be implemented, until the top rate lowers to 4.05%. It effectively fast-forwards a series of gradual cuts put in place late last year, which lowered the top rate to a minimum of 4.5%.
The state's tax rate on corporations, which currently sits at 4%, would be cut in half to 2% starting in 2024, and could see additional future cuts that would remove the tax entirely.
Social Security benefits for all seniors who receive them would also be exempt from income tax under the legislation.
Democrats decried the cuts as potentially disastrous for the state's financial health in the future, comparing them to a series of cuts in Kansas under former Gov. Sam Brownback's administration that led to severe budget shortfalls and underfunding of state services.
"We really need to look no further than our neighbors to see how a tax cut like this will affect our state," said Rep. Peter Merideth, a St. Louis Democrat, on Thursday. "This is short-sighted and bad policy."
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Republican lawmakers aimed to cut the state's corporate income tax as part of last year's cuts, but it was stripped out during negotiations. Speaker of the House Dean Plocher, a St. Louis Republican, said that "a lot of these tax cuts stem from a dialogue that occurred last fall," and are now included in the package.
"We do believe that people deserve more, and we believe we can do better," Plocher said to reporters Thursday.
House Minority Leader Crystal Quade, a Springfield Democrat, said she would "love to see the governor veto this" if it passes the Senate and heads to his desk. She said last year when House Democrats met with Gov. Mike Parson about his desired tax cuts, he told them "this is the last one I'm going to do while I'm governor."
"He said that and he said that what we would like to do is give me this and then we're going to invest in things like child care," Quade said. "And he looked me dead in the eyes knowing that's something I care about and said we're going to make investments there."
Galen Bacharier covers Missouri politics & government for the News-Leader. Contact him at gbacharier@news-leader.com or on Twitter @galenbacharier.
This article originally appeared on Springfield News-Leader: MO House passes new round of tax cuts on income, corporate rates
