Massive tax cuts in Kansas continue to drive conversation in the Missouri statehouse, with Republican lawmakers proposing three possible responses from the Show-Me State.
Each salvo in the ongoing border war comes with a hefty price tag, but supporters say the tab will pale in comparison to the cost of doing nothing and watching businesses relocate across the state line.
“We have to respond to what is happening in Kansas,” said Sen. Eric Schmitt, a Republican from Glendale. “Whether we like it or not, we are in a competition with other states.”
Yet Missouri already is unable to fully fund its public schools, has slashed money for higher education and can’t pay for needed repairs to highways and public buildings, said Sen. Paul LeVota, a Democrat from Independence.
“The truth is, people leave Missouri and move to Kansas because of their schools, not because of their taxes,” he said. “I don’t want to do something that is going to endanger the quality of life in Missouri.”
Schmitt wants to gradually cut taxes in half for all businesses over the course of five years. When fully implemented, the cuts will cost the state $350 million a year, Schmitt said.
Another bill, sponsored by Sen. John Lamping, a Republican from Ladue, would reduce individual income taxes while raising the cigarette tax to 43 cents a pack from the current 17 cents. It would also raise the sales tax, but that money would be dedicated to paying for highway repairs.
All told, Lamping’s bill would cost the state $1.1 billion a year.
The third bill, sponsored by Sen. Will Kraus, a Republican from Lee’s Summit, lowers the top rate of income taxes from 6 percent to 5 percent, creates a 25 percent tax deduction for business income and cuts the corporate income tax in half over three years.
Those cuts are estimated to cost the state nearly $1 billion annually once fully phased in.
Jim Moody, who served as Missouri budget director under former Gov. John Ashcroft, a Republican, cautioned against following Kansas’ example. Its tax cuts will lead to a massive budget hole, he said, and lawmakers in the Sunflower State will have to find areas to cut to fill it.
Senate President Pro Tem Tom Dempsey, a Republican from St. Charles, has said repeatedly that any tax cuts would have to be paid for in some way. The most popular ideas so far have included reducing tax credits and making it easier to collect sales taxes on online purchases.