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Ways and Means committee debate heats up over income tax


JEFFERSON CITY, Mo. – The Senate Ways and Means committee started the day off by shaking themselves awake to hear four bills related to taxes in the Show-Me State.

Meeting at 8 a.m. Tuesday morning, Sen. Wayne Wallingford led his committee through testimony and debate over several items ranging from agriculture to earned income tax credits and personal income taxes.

Here’s a breakdown of the bills heard:

SB 548

Sen. Brian Munzlinger’s bill addressing the issue of agricultural land values was the first heard by the committee, though just three senators on the committee were present.

Munzlinger’s bill prohibits the State Tax Commission from raising agricultural land productive values under certain circumstances, with the senator telling the committee that farmers and ag producers have “had some really tough years” in recent times, citing  the $3 price of corn and $9 price of soybeans, drastically lower than years ago.

“We have a huge yo-yo in ag production, and we don’t want to see fluctuation in that,” he said.

A number of agricultural organizations rose to voice their support, including Missouri Pork Association, Missouri Soybean Association, Missouri Corn Growers Association, and the Missouri Cattlemen’s Association, while no opposition was presented.

SB 615

Senator Caleb Rowden’s bill addressing the creation and implementation of a state earned income tax credit attempts to do what 26 states have already done. Rowden’s bill seeks to establish the Missouri Earned Income Tax Credit Act, which he says will serve as an anti-poverty tool in the state.

“I hope this will create a very easy and non-bureaucratic way to help people and lift them up to the next rung of the economic ladder,” he told the committee.

If enacted, the bill would take effect in 2020, giving Missourians what Rowden called “a handoff instead of a handout.”

“I agree that doubling the deduction definitely hits some folks,” he told Sen. Bob Onder. “My hope is that this is a part of a larger tax discussion.The conversation around the merit of the EITC is important.

“There are a lot of folks that are just looking for tax relief and wanting to invest in their community.”

Speaking in favor of the bill, Jeanette Motte Oxford of Empower Missouri said that “over a million Missourians went to food pantries last year” and that the state was “125,000 units short of affordable housing.”

“We think that state EITCs provide a more stable environment.”

A member of the Missouri Budget Project said that, very simply, the bill would increase take-home pay, encourage work, and stimulate local economies.

“This is building a road for people to get out of poverty,” Joe Reagan from the St. Louis Regional Chamber stated.

SB 625

Sen. Mike Cierpiot’s bill seeks to modify certain sales and use tax exemptions, dealing with a topic that first rose in 2016.

We’ve kicked the can down the road,” Cierpiot said before outlining how a Supreme Court decision had presented an issue regarding telecom companies.

The exemption for telecom companies had been affirmed in two cases, but when the court handed out the decision, it threw those out, Cierpiot summarized.

He said that his bill was simply looking to fix the issue with a narrowly crafted approach to return tax law back to the way it was before the court decision and that it only addressed telecom industries.

“Keeping it narrow and revenue neutral is the goal,” he told the committee. If not addressed, he said, it could negatively affect some initiatives like increasing broadband. That sentiment was echoed by a representative for AT&T, who told the committee this bill would avoid a significant tax increase by the courts.

“Legislature should dictate tax policy, not the courts,” Cierpiot concluded.

SB 667

Sen. Bob Onder presented the final bill of the morning, which would increase the amount of the personal income taxes cut and the business income deduction in current law.

Under his plan, the current cuts would be doubled, meaning that in each year the trigger is met, the top rate will be reduced by 0.2 percent. The top rate will continue to be reduced until it is lowered to 5 percent.

For the business income deductions, each year that the trigger is met, the deduction amount will be increased by 10 percent. Once fully phased in, individual taxpayers may deduct up to 50% of their business income.

“While some would argue that Missouri is a low tax state… we are the 15th highest in income tax,” Onder said.

He said that the state had four major opportunities to fix the state’s budget:

  • Reduce waste and inefficiency
  • Address Medicaid
  • Enforce sales tax on all sales
  • Take a hard look at tax credits

But Onder’s bill proved to be the only one in the committee from which opposition rose.

“Under the current state budget, it’s anticipated that the individual income tax accounts for 70 percent of the general fund,” Jim Moody said, speaking on behalf of the Civic Council of Greater Kansas City. “So these bills, along with the ones last week, would the cut the largest source of funding to the state.”

Moody cited the newly-released budget recommendations and the cuts to higher education as some of their concerns.

But from there, the conversations between those testifying and the members of the committee took a turn when Sen. Andrew Koenig’s line of questioning turned from the taxes to the budget and education.

“We need to reform education and provide options,” he told Moody.

“Senator, at some point there’s going to be a breaking point, where fully funding the formula won’t happen,” he said.

The next witness, Mike Lodewegen of the Missouri Council for School Administrators, squared off with Koenig in a tense discussion revolving around education, economics, and money.

“Senator, I’m not going to get into a talk about economics,” Lodewegen said. “If you’re willing to gamble with this, Senator, go for it…”

“Gamble? $9 billion and we’re talking about cutting $100 million at a time? That’s not a gamble, that’s a very small amount,” Koenig replied.

“May I finish?” Lodewegen asked. “In a typical year, the general revenue growth in the state of Missouri is $300-$400 million. We’re not even close to seeing that in the last few years, and as a result, we are cutting higher education.

“We can’t continue to reduce our revenues and expect it to turn around.”

“Do you have any evidence that if we increased money to K-12 that it would increase academic outcomes?” Koenig asked. “Find it. Because it doesn’t exist. We could improve academic outcomes and options for parents, but you stand in the way every single time.”

After an exchange lasting a few minutes, the chairman, Sen. Wallingford, interrupted and told the men to continue their discussion in another setting.

No action was taken on any of the bills by the committee.