JEFFERSON CITY, Mo. – For many legislators with districts bordering neighboring states, competitiveness is a constant concern. Sen. Eric Schmitt, R-Glendale, has filed SB4, which was voted out of committee this morning, which he says would provide historic broad based tax relief for Missourians.
The bill, which is consistent with the legislation he filed last year, takes the tax relief further.
“SB4 would expand on the work we did last year of the first broad-based tax relief in nearly 100 years,” Schmitt said. “Last year, we went from 6 to 5.5 on the personal income tax rate over a period of years, this would go from 6 to 5. We had a 25% tax cut for all small businesses. This would go to a 50% tax cut for almost all small businesses.”
Schmitt alluded to the tax relief from the administrations of JFK and Ronald Reagan as examples of when similar broad based tax relief was successful in expanding the economy.
“We have not moved forward with anything really like this in the history of our state, so I think that this is a positive move for us,” Schmitt said. “I think that it will grow the pie. There are also revenue triggers in this bill as there were in the last bill. Each phase of the tax cut doesn’t go into effect until certain revenue numbers and revenue growth are met. I think people deserve the opportunity to keep more of their own money: whether they want to invest it in their business, hire an individual for their business, or put that money into a 529 college savings fund for their kids, whatever – people ought to have the decision making power when it comes to their money, not government.”
The senator, who is also running for State Treasurer in 2016, was keen to say that the broad based tax cut is important, especially for small businesses that would not be impacted by lowering corporate income tax rates.
“You don’t affect the other 95% of other businesses that are out there. This bill would do that,” Schmitt said. “This would help all those small businesses across the state, whether it was an auto repair shop, a dry cleaner, or a ma and pop pizza place. They would receive the benefit and pay of half of what they currently pay to the state. They could bring on a new part time worker, they could buy a new pizza oven, whatever it is that they are wanting to do – they would have more of that capital to invest.”
However, House and Senate colleagues in other border districts think the measure may go too far, as they look towards Kansas’ budget shortfalls.
“Instead of doubling down on the disastrous economic experiment in Kansas, we should be looking at tax relief for working families like the Earned Income Tax Credit bill filed by Senator LeVota and myself,” said Kansas City Democrat Rep. Jeremy Lafaver.
Schmitt says his bill isn’t like what Kansas did, however, but that tax relief is necessary for Missouri to remain competitive with our neighboring states, of which, Missouri has 8.
“This is a different structure,” Schmitt said. “It is based on revenue triggers over a period of years. If you look around, every state, except for Illinois, is approaching that kind of tax policy. I think that we are fooling ourselves if we don’t think that in the long run, people aren’t going to make rational economic decisions about where they want to put their money, where they want to live, where they want their business to be.”
This and last year’s bill are inspired by Jack Kemp, who Schmitt admires. He said it is the type of tax policy that Kemp pursued that would keep states competitive, saying, “we have to pursue this.”
The senator is happy with the tax relief bill he filed last year, but continues to hope Missouri will take another step towards broader tax relief.
“I think last year was really, really positive; it was historic. I would really like to see us continue moving forward policies that allow people to keep more of their own money.”
Rachael Herndon was the editor at The Missouri Times and also produced This Week in Missouri Politics, published Missouri Times Magazine, and co-hosted the #MoLeg podcast. She joined The Missouri Times in 2014, returning to political reporting after working as a campaign and legislative staffer.
Rachael studied at the University of Missouri – Columbia. She lives in Jefferson City with her husband, Brandon, and their two children.