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Missouri legislature passes $620 million tax cut, Nixon signals possible veto

04/16/2014 4:10 PM

04/16/2014 5:48 PM

The Missouri House gave final approval Wednesday to a $620 million tax cut bill, setting the stage for a showdown with Gov. Jay Nixon.

Nixon, a Democrat, is expected to veto the measure. But GOP legislative leaders are hopeful they’ll muster enough support for an override.

Republicans hold 108 seats in the Missouri House, only one shy of a veto-proof two-thirds majority. Democratic Rep. Jeff Roorda of Jefferson County joined the GOP in support of the bill Wednesday.

The bill cleared the Missouri Senate with enough support for an override earlier this month.

“We’ve been able to unify our caucus on the tax cut issue,” said House Majority Leader John Diehl, a St. Louis County Republican. “Now we’ll just have to go to work on a couple of Democrats.”

Nixon vetoed a similar tax cut proposal last year, calling it a “an ill-conceived, fiscally irresponsible experiment.” He then spent the summer barnstorming the state with a coalition of education groups to rally opposition.

In the end, 15 Republicans broke ranks and sided with Nixon to kill the push for an override.

Those GOP lawmakers are now back on board with the tax cut proposal. One of them, Rep. Nate Walker of Kirksville, said Wednesday that this year’s bill is much simpler than the one he opposed, and that many of his concerns have been put to rest.

Partially inspired by much larger tax cuts enacted in Kansas, the Missouri legislation would

gradually cut the top individual income tax rate

to 5.5 percent from the current 6 percent and phase in a 25 percent deduction for business income reported on personal tax returns.

Those tax cuts would occur only if state revenues grow by at least $150 million over the high mark of the previous three years.

Proponents of the bill say putting more money in taxpayers’ pockets would improve the state’s economy and ultimately increase revenues.

If Missouri doesn’t reduce the tax burden on businesses and individuals, they argue, it stands the risk of falling behind its neighbors, most notably Kansas, which has slashed or eliminated taxes in recent years.

Critics of the idea argue that Missouri is already a low-tax state that is underfunding vital services like education and public safety. Using Kansas as an example is foolish, they say, since that state has struggled with falling revenue since their tax cuts went into effect.

“We’re already underfunding our public schools by $600 million,” said Rep. Randy Dunn, a Kansas City Democrat. “Millions of dollars will be lost in education funding with the passage of this bill.”

Earlier this year, Nixon said unless lawmakers are able to rein in spending on business tax credits, “discussion of tax cuts is a nonstarter.”

While he stopped short of promising a veto Wednesday, Nixon panned the tax cut legislation.

“On its face,” Nixon said, “this year’s reckless fiscal experiment looks an awful lot like last year’s reckless fiscal experiment.”

Because the bill passed in mid-April, if Nixon vetoes it lawmakers will get their chance at an override during the current session instead of having to wait until September.

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