JEFFERSON CITY • Gov. Jay Nixon, who barnstormed the state last summer to blast an income tax cut passed by the Missouri Legislature, provided the first clues Thursday about the type of tax cut he would sign.
Saying he wanted to help working families, Nixon told reporters that he could support reducing the state’s 6 percent top personal income tax rate to 5.75 percent, so long as the state’s foundation formula for K-12 public schools was fully funded.
Nixon has proposed fully funding the school aid formula in two steps, starting with a $278 million down payment this year.
The governor said he could support an additional income tax cut, cutting the rate to 5.5 percent, if that cut were coupled with reforms in the state’s “most expensive and least efficient” tax credit programs.
He was referring to tax credits that fund development of low-income housing and rehabbing historic buildings, which together cost state taxpayers about $223 million last year.
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Nixon, a Democrat, and Republican fiscal conservatives in the Senate have pushed for cutbacks in development tax credits for several years but have failed to reach agreement with the programs’ defenders in the House.
“For too long these programs have allowed wealthy developers and special interests to reap massive windfalls at taxpayer expense,” Nixon said.
“Let’s give a break to the working families.”
Along with setting those conditions for a tax cut, Nixon said he preferred making a cut contingent on state revenue growing by $100 million to $200 million a year.
He also ruled out “tax gimmicks” that reduce taxes on “pass-through” business income, which he said would benefit “well-heeled corporate partnerships like law firms” and would not create jobs.
Cutting taxes on pass-through income was the centerpiece of the bill passed by the Legislature and vetoed by Nixon last year.
The governor outlined his tax cut plan in remarks to journalists at an annual Missouri Press Association luncheon at the Governor’s Mansion.
He said he had discussed his ideas with Sen. Will Kraus, R-Lee’s Summit, who sponsors a tax cut proposal in the Senate.
In an interview, Kraus said he was “delighted that the governor is willing to engage” on the issue and detail his concerns.
Kraus said he wanted to discuss the matter with Senate colleagues before talking about the particulars of Nixon’s plan.
Virginia Young is the Jefferson City bureau chief of the Post-Dispatch. Follow her on twitter at @virginiayoung.
