March 12, 2013

Missouri Senate passes income tax cut

Effort to change state’s tax policy comes after Kansas implemented sweeping income tax cuts.

Disregarding objections from Gov. Jay Nixon, the Missouri Senate on Tuesday passed a tax overhaul that would cut income taxes by hundreds of millions of dollars annually for residents and businesses but charge them more each time they buy something at a store.

The legislation is touted by supporters as the most dramatic change to Missouri’s tax policies in decades. It’s prompted by a desire to compete with sweeping income tax cuts in Kansas.

The Republican-led Senate voted 23-11 on Tuesday to send the legislation to the House, where Republican leaders also have proclaimed a desire to pare back the state’s income tax in favor of a higher sales tax. Senators passed the bill despite each receiving a letter Monday from the Democratic governor urging them to vote no because of the effect of a higher sales tax on older adults, veterans and families.

The core of the bill would reduce Missouri’s income tax for individuals and corporations by three-quarters of a percentage point over five years while raising the state sales tax by one-half cent over the same time.

“This is a policy shift that, in my opinion, is going to drive the economy up, and it’s going to put money back in the hands of taxpayers and small businesses in this state,” said the bill’s sponsor, Republican Sen. Will Kraus of Lee’s Summit.

Opponents said they fear that the tax cut would jeopardize funding for schools.

“This is the Show-Me State becoming the Me-Too State to be like Kansas,” said Sen. Paul LeVota, an Independence Democrat. “There’s a race to the bottom that we’re going to win against Kansas.”

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