Legislation aimed at countering massive tax cuts passed last year in Kansas cleared the Missouri House on Wednesday, putting it one vote away from the governor’s desk.
The legislation was approved by the House on a 90-68 vote, with 18 Republicans joining Democrats in opposition. That puts the bill far short of the 109 votes needed to override a veto by Gov. Jay Nixon, who earlier this year criticized the measure as a tax increase on working families and senior citizens.
The bill would gradually reduce the top individual income tax rate by two-thirds of a percent and the corporate tax rate by three-quarters of a percent. The reductions would happen over five years as long as revenue grows at least $100 million in a given year.
It also would create a 50 percent tax deduction for all businesses.
To offset some of the cost of the tax cuts, the bill gradually increases the sales tax by three-fifths of a cent, with the additional money going to schools, a new mental hospital and roads.
“I wish this tax cut would be more, but I have to pause and realize the historic nature of what we’re doing today,” said Rep. Eric Burlison, a Springfield Republican.
The bill also includes a provision making it easier to collect sales taxes on Internet purchases and creates an amnesty period in which delinquent taxpayers could pay without penalty.
Proponents of the plan say it will make Missouri more competitive with Kansas, which last year slashed state income taxes and eliminated them entirely for nearly 200,000 businesses.
Critics, however, say the result of the legislation will be budget shortfalls that will force cuts to programs like K-12 education, which is already underfunded by $600 million. When fully phased in, the tax changes in the bill are estimated to reduce state revenue by $300 million to $500 million.
“Someone, whether it’s our public education system or our senior citizens, is going to have to bear the brunt of this in the future,” said Rep. Jon Carpenter, a Kansas City Democrat.
The Senate, which passed a different version earlier this year, is expected to debate the measure Thursday morning. Republicans can agree to the changes made in the House and send the bill to the governor or ask for a conference committee to work out differences.