Koenig, Schmitt tout the income tax reduction leading up to cut implementation
JEFFERSON CITY, Mo. – Beginning in 2018, Missouri’s highest income tax rate will fall from 6 percent to 5.9 percent for the 2018 tax filings, and will also allow small business owners to deduct 5 percent of business income from their individual filings.
A tweet by now-Senator Andrew Koenig at the end of August left some people scratching their heads and wondering if the statement was true.
On Aug. 30, the Republican Senator from Manchester tweeted, saying “The bill that I carried cutting MO’s income tax for 1st time in over 100 years will start its 1st phase in jan 1 2018. #moleg @Eric_Schmitt.”
The bill that I carried cutting MO’s income tax for 1st time in over 100 years will start its 1st phase in jan 1 2018. #moleg @Eric_Schmitt
— Andrew Koenig (@Koenig4MO) August 30, 2017
Many wondered to themselves “has it really been more than 100 years since the state’s income tax has been cut?”
But is it the first income tax rate reduction in more than 100 years?
Missouri’s income tax rates were first put in place in 1917, 100 years ago.
As it turns out, the answer is no. But it’s close.
The bill Koenig is referring to is SB 509, a tax-cut bill enacted by the Republican supermajority in 2014, which would decrease the income tax rates by a tenth of a percent each year until the tax rate would become 5.5 percent instead of the current 6.
It also would allow an increase in tax deductibles for business income until it reaches 25 percent.
The bill had been vetoed by then-Gov. Jay Nixon, but the Republican-led legislature managed to override the Democrat’s veto.
But to kickstart that law into effect, the state’s gross income had to beat the income of one of the three previous years by $150 million.
That finally happened in the 2017 fiscal year, which means the new changes will begin starting on January 1, 2018.
State Treasurer Eric Schmitt, who championed the legislation as a state senator, in July announced the numbers had been met, and that the new changes would begin on January 1, 2018.
State Treasurer Schmitt confirms tax cuts are coming to Missouri
A report by Politifact outlines that there has never been a decrease in the tax, though there have been several revisions over the last century.
And to be fair, in Treasurer Schmitt’s news release, it says in the final line that “the change will mark the first income tax rate reduction for Missouri taxpayers in nearly 100 years,” with the key word being ‘nearly’.
But regardless of the issue of one word’s correctness over another, it pales in comparison to the fact of what effect this policy will have on Missourians.
Besides lowering the tax rate, it also means that tax brackets will now have to adjust annually based on the percentage increase due to inflation. But also means that the legislature will have time to adjust to dealing with less revenue coming in as the rates decrease.
And as Treasurer Schmitt has said about the tax cuts, “this will mean more job opportunities and higher take-home pay for Missourians, which will in turn help to grow our economy. While states with poor fiscal management like Illinois and Connecticut look to raise their taxes to keep government bloated, Missouri is financially empowering its citizens by letting them keep more of their hard-earned money.”
Benjamin Peters was a reporter for The Missouri Times and Missouri Times Magazine and also produced the #MoLeg Podcast. He joined The Missouri Times in 2016 after working as a sports editor and TV news producer in mid-Missouri. Benjamin is a graduate of Missouri State University in Springfield.
