(The Center Square) – The Missouri Senate moved closer to passing bills for an income tax cut and agricultural tax credits on Tuesday, mirroring Republican Gov. Mike Parson’s call for both when he requested a special session.
Senate Bills 3 and 5, sponsored by Sen. Lincoln Hough, R-Springfield, and Sen. Andrew Koenig, R-Manchester, were combined into one eight-page bill. The bills repeal current income tax reductions and reduce the top rate of income tax to 4.95% beginning in the 2023 calendar year. Parson requested the income tax rate be reduced from 5.3% to 4.8%.
An additional possible 0.15% reduction in the top tax rate is included in the bill. However, it will only be effective if the amount of net general revenue collected in the previous fiscal year exceeds the highest amount of net general revenue collected in any of the three prior fiscal years by at least $175 million.
The bill also adds three additional 0.1% reductions in the top tax rate, bringing the eventual rate to 4.5%. The additional reductions will take effect if the amount of net general revenue collected in the previous fiscal year exceeds the highest amount of net general revenue collected in any of the previous three fiscal years by at least $200 million and exceeds the amount of net general revenue collections from the fifth prior fiscal year, adjusted annually for inflation.
The amount of net general revenue collected will be adjusted annually by inflation to reduce the top tax rate from 4.8% to 4.5%.
The bill also would exempt the first $1,000 of income from taxation for all tax years beginning on or after Jan. 1, 2023. The current law exempts the first $100 of a taxpayer’s income from taxation.
Hough said the bill’s triggers guard against state funding problems during economic downturns.
“This is not predicated on one-time money that we have in the bank,” Hough said. “My intention will be to continue funding the things that we have prioritized, like the workforce development and education lines in our budget.”
Democrats voiced opposition to the bill. They referred to statistics from the Missouri Budget Project, stating the median income family will see approximately $5.50 in tax savings per month while a millionaire will see approximately $350. Several also stated the tax rebate vetoed by Parson would be more favorable to most working families.
“I think people in my district would greatly appreciate tax relief, which is why I and a majority of Democrats voted for rebate checks,” Senate Minority Leader John Rizzo, D-Independence, said. “Obviously that’s not on the table anymore and that’s the priority of the governor, this body and the (House). I still would like to have some sort of tax relief, even though it’s not as much as I like and it’s not the way I believe we should do it.”
Senate Bill 8 was perfected with a wide range of agricultural initiatives. An amendment to prevent “alien or foreign” agricultural businesses from being eligible for the tax credit was ruled out of order or beyond the scope of the special session. The amendment caused a delay in the Senate until a ruling could be made. Sen. Bob Onder, R-Lake St. Louis, continued to argue the amendment should be allowed after the ruling.