Senate Republicans promote retooled plan for income tax cut

Supporters said they scaled back the tax cut to make it more palatable to critics. For example, the bill would spread most of the tax cuts over 10 years instead of five. It also drops a proposal to increase the sales tax.

Some of the tax cuts wouldn’t be triggered unless state revenue grew by at least $100 million, compared to the highest of the previous three years.

GOP strategists said the changes would give them a better shot at either getting Democratic Gov. Jay Nixon to sign the bill or corralling the two-thirds majorities needed in each chamber to override a gubernatorial veto.

“We’ve done everything we can to try to soften the blow here and to respond to the other side and be responsible stewards,” said the bill’s sponsor, Sen. Will Kraus, R-Lee’s Summit.

Senate Democrats opposed the bill and were stalling a vote Tuesday night.

The critics said Missouri is already a low-tax state and lacks enough money to adequately fund its public school aid formula and rebuild aging highways.

“Until we get those fundamental things tackled, we don’t think we should be cutting taxes,” said Senate Minority Leader Jolie Justus, D-Kansas City.

If approved, the bill would return to the House, which could accept the changes or seek a compromise. The Legislature faces a mandatory May 17 adjournment.

Legislative staffers estimate the bill could cost the state treasury $577 million when fully implemented in 2024. The Missouri Budget Project, which advocates for lower and moderate-income Missourians, put the price tag at $817 million.

Kraus maintained that Missouri would realize more revenue because the bill would stimulate the economy.

The bill would give businesses that “pass-through” their income to the owner’s personal return a 50 percent tax cut, phased in over five years.

The other tax cuts would be phased in over 10 years, so long as state revenue hit the trigger. The top personal income tax rate would drop by one-half of a percentage point, to 5.5 percent. The corporate tax rate would drop by 3 percentage points, to 3.25 percent; the first $25,000 in corporate income would be tax-free.

The bill also would take steps to impose taxes on online sales and provide a period of tax amnesty. Tax scofflaws would be excused from paying penalties and interest on unpaid taxes if they ponied up what they owed between Aug. 1 and Oct. 31.

While competing with Kansas’ tax cuts has been the rallying cry, senators said Tuesday that the Missouri plan is more modest and carefully crafted to not blow a hole in the budget.

"It’s not the same as the Kansas tax cut plan so don’t say it is," said Senate President Pro Tem Tom Dempsey, R-St. Charles.

(The bill is HB253.)