JEFFERSON CITY, Mo. – Legislation was filed in the House that aims at cutting state income tax rates while generating revenue to repair and improve Missouri’s transportation infrastructure.
House Speaker Pro Tem Elijah Haahr filed HB 2540 on Thursday which would lower state income taxes for individuals and corporations. It would also eliminate some deductions, close loopholes and increase vehicle user fees.
“The people of Missouri sent us to Jefferson City to find bold solutions to our greatest challenges. From growing families to the greatest generation, from entrepreneurs to empty nesters, Missourians will pay lower taxes under this proposal,” Haahr said.
The bill would reduce the state’s highest personal income tax rate from 5.9 percent to 5.0 percent and the corporate income tax from 6.25 percent to 5.0 percent. This move would make Missouri one of 10 states with the lowest income taxes in the nation.
“This bill offers no special giveaways but instead gives Missouri businesses a tax cut and incentivizes them to hire more Missouri workers to meet the workforce needs of our future,” Haahr said.
The legislature has spent years studying and discussing ways to find the funds to repair and improve Missouri’s transportation infrastructure and, according to Haahr, his bill will provide one path forward in generating the necessary revenue. The idea stems from a recommendation by the 21st Century Transportation Committee.
The bill is designed to generate revenues for state roads and bridges by putting Missouri’s vehicle user fees in line with inflation and other states. Haahr noted the state’s current vehicle license and registration fees were put in statute in 1984, and have not changed in more than 30 years. His bill would update fees from their 1984 value to present day value.
The increase is a key component to the effort to generate nearly $2 billion over the next 10 years for the state road fund to repair and improve Missouri’s aging transportation infrastructure.
To maintain financial stability to the state tax code, the bill would also:
- Join the Streamlined Sales Tax agreement so that Missouri collects sales taxes on online purchases placing Missouri brick and mortar businesses on equal footing with online competitors.
- Phase out the federal income tax deduction on state returns for individuals and corporations with over $150,000 in income.
- Reduce waste in state government by consolidating maintenance between certain government agencies.
- Eliminate deductions and closing loopholes.
- Implement other necessary reforms that would eliminate government inefficiencies.
Haahr said the reforms are critical components to keep the bill fiscally responsible.
“These are common sense, fiscally responsible, 21st-century solutions that will lower the overall tax burden on Missouri families and businesses while also helping us to rebuild our crumbling transportation infrastructure,” Haahr said.
Two revenue-raising ideas Haahr includes to offset his tax cuts are similar to elements of Greitens’ proposal: one would phase out a state deduction based on federal income for people and companies reporting more than $150,000 in income, and another would limit how corporations could calculate their income.
While the tax plan mirrors Gov. Eric Greitens’ proposal in a few ways, HB 2540 is more drastic in reducing personal income taxes and includes ways to create revenue for transportation infrastructure, according to Haahr. Greitens’ plan proposes lowering the personal income tax rate to 5.3 percent and the corporate rate to 4.25 percent
The tax overhaul bill moving forward in the Senate also includes generating revenue to repair roads and bridges but it is done through a gas tax. The Senate plan proposes dropping personal income taxes to 4.85 percent.
“The next generation of Missouri taxpayers knows better than Jefferson City how to spend their money. They are starting businesses, organizing community charity efforts, and revitalizing downtowns across the state. We should equip them to do this by simplifying their tax rates, consolidating our brackets, and taking less of their hard earned money.”