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Missouri governor outlines conditions for potential tax cut deal

02/13/2014 2:38 PM

02/13/2014 6:09 PM

If lawmakers agree to fully fund Missouri’s public schools and rein in spending on the state’s biggest tax credit programs, Gov. Jay Nixon said Thursday, he will sign a tax cut bill.

The framework of a potential deal comes after negotiations with Sen. Will Kraus, a Lee’s Summit Republican sponsoring tax cut legislation.

Nixon vetoed Kraus’ bill last year, citing concerns that it could jeopardize basic funding for education and vital public services.

Republican lawmakers returned to Jefferson City in January committed to taking another shot at a tax cut plan.

Kraus’ current bill would phase in a 50 percent deduction for business income reported on individual income tax returns over five years. It also would gradually cut the state’s top individual income tax rate of 6 percent to 5 percent over a decade, with each year’s reduction taking place only if yearly state revenue grows by at least $100 million.

Nixon said that in addition to the education funding and tax credit reform provisions, Kraus would have to strip out the business income tax cut, leaving only a cut for individual taxpayers. The business cuts, Nixon said, “primarily benefit well-heeled corporate partnerships like law firms, and there is no evidence, anywhere, that these schemes do anything to create jobs.”

Kraus said he could agree to the guidelines laid out by the governor, but he has not yet spoken with his fellow senators about any deal.

“The governor has clearly communicated what he will sign,” Kraus said. “Now it’s my job to see if I can get that to his desk.”

According to a release issued by the governor’s office, Kraus intends to put forward legislation reducing the top individual income tax rate to 5.75 percent from 6 percent, effective only after the K-12 foundation formula is fully funded and only after $200 million in revenue growth. The legislation would provide an additional reduction to 5.5 percent, effective after legislation is enacted to reduce low-income housing tax credits to $110 million annually and historic preservation tax credits to $90 million annually.

Connecting tax cuts with tax credits may cause issues in the Missouri House.

House Speaker Tim Jones, a Eureka Republican, recently

ruled out pairing the two ideas, which he said he views as completely separate issues.

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