Missouri Senate approves income tax cut, farm tax credits

(The Center Square) – The Missouri Senate completed their particular legislative session assignment – cutting taxes – mindful of the consequences of their actions, the implications of their legislation and the uncertainty of their bills in the House.

Senate leaders from both sides of the aisle met with reporters Wednesday to answer questions about their actions to fulfill the twofold request from Republican Gov. Mike Parson during the special session he called. The Senate passed a bill with a wide range of agriculture tax credits and a reduction in income tax.

“We’re excited we were able to get both of these things accomplished with a minimal amount of fanfare and minimal amount of pain,” Senate Majority Leader Caleb Rowden, R-Columbia, said. “We knew these things were important. They’re important not only for the tax cut being important for almost every Missourian and every Missouri family, but the agriculture stuff was unfinished. It was important for us to stand up for Missouri farmers and family farms.”

Democrat leadership said the two bills inflicted as little harm as possible to current funding of state operations, future budgets and to the middle class.

“We heard some pretty extreme proposals put forward this week, including taking the state income tax down to zero and more corporate tax cuts,” Senate Minority Leader John Rizzo, D-Independence, said. “Senate Democrats are here to fight for working families, not help rich CEOs with their second mansion. We support middle-class tax relief, not corporate handouts. The extreme proposals put forward by a few Senators from the GOP would have devastated our budget and done nothing for the middle class.”

The Senate’s income tax bill contains triggers to lower the tax rate if Missouri’s general revenue collections meet certain benchmarks. The tax cut Parson requested was a reduction from 5.3% to 4.8%, returning $700 million to taxpayers. The Senate’s bill cuts the rate to 4.95% and could get to 4.5% if revenues continue to increase. The fiscal note stated a $130 million loss to general revenue in fiscal year 2023 if the bill becomes law on Jan. 1, 2023, and $335 million in 2024.

“Each one of those triggers is roughly $110 million,” said Sen. Lincoln Hough, R-Springfield, the bill’s sponsor. “So call that close to $900 million. Plus $50 million with the bottom bracket rolling off, so anyone who makes under $14,000 will not have an individual income tax liability. So you’re at $950 million. Let’s call it a billion.”

Sen. Brian Williams, D-University City, said current problems throughout the state kept him from voting for the tax cut.

“I think the conversation was focused on the wrong things and that’s why I voted no,” Williams said. “But clearly, as a Senator Rizzo stated, folks voted on what they felt was best for their district. And right now we need teachers with higher pay. We need to figure out how to deal with paying child abuse investigators. There’re just so many other areas where we need to ensure that state employees get a raise. So that’s where my focus is. It really isn’t focused on a tax cut for wealthy people.”

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