Perhaps you’ve seen the commercials celebrating “Missouri’s first income tax cut in 100 years.” Frankly, they’re hard to avoid – a St. Louis area billionaire has spent millions of his own dollars flooding the airwaves with this message. What he forgets to mention is that it’s really a tax cut for him – not you.
The bill, HB 253, was passed earlier this year by the state legislature, and was subsequently vetoed by Governor Nixon.
So, who really gets a tax cut in this bill? The corporate tax rate is slashed almost in half – from 6.25 down to 3.25 percent. That’s certainly a lot. Additionally, business taxes on partnerships, LLCs, and so forth, are slashed by a full 50%. That’s a lot, too.
The everyday Missourian, on the other hand, is not so lucky. For you, only the top income tax bracket rate has been reduced, and even then only from 6 percent to 5.5 percent. That’s right – a mere one half of one percent.
To make matters worse, the bill places a new state sales tax on prescription drugs and college textbooks. Between the negligible tax cut for individuals, and the various sales tax hikes, many Missourians would actually see their taxes go up next year.
The patent unfairness of this attempt at tax reform is only the beginning of its problems. Not surprisingly, when you pass a bill with sweeping 50 percent corporate and business tax cuts, there will be budget shortfalls right around the corner. In fact, HB 253 is expected to cost the state at least 800 million dollars per year, if not more.
The Missouri Constitution requires our state to balance its budget. No running deficits, no printing money. This means we actually have to set spending priorities, and then make sure we have the money to pay for them. Doing this requires fiscal responsibility on both sides of that equation.
Missouri is already one of the lowest tax states in the country (we collect 30% less in taxes per capita than the national average for states) and because of this we already struggle to fully fund vital state services. For example, the state legislature passed into law an official funding formula for our public schools, but is currently underfunding their own formula by more than 600 million dollars per year.
My colleagues in the House publicly lament this fact, saying, “Gee, we’d sure like to fully fund education, but the money just isn’t there.”
They offer this same pitch on other issues, too. Earlier this year they eliminated a tax credit for low-income and disabled seniors, saying “Gee, we like it, but the money isn’t there.” The same goes for funding our public colleges and universities, which have been cut by nearly 300 million inflation-adjusted dollars over the past 15 years. “Gee, we sure wish we could…”
Those same legislators then turn around and vote for a tax bill which blows an 800 million dollar hole in the state budget above and beyond the current shortfalls. Something, clearly, doesn’t add up here; you can’t have it both ways.
The truth is, our state does need tax reform. But we need to be smart about it. This year I proposed the Missouri Tax Modernization Act, which simplifies and modernizes our antiquated tax code while at the same time protecting education and other state services from taking another round of painful cuts. We don’t need tax reform that shifts the tax burden to low and middle-income families, or that leads to massive new shortfalls in an already strained state budget.
The state legislature reconvenes on September 11th and will decide whether or not to override the Governor’s veto of HB 253. This vote will play a significant role in determining the future of our state – I hope we get it right.
State Representative, District 15