Tax cut provides another gift to special group in Missouri

05/05/2014 8:01 PM

05/05/2014 8:01 PM

Missouri Republicans are framing their effort to blow a $600 million-or-bigger hole in the state’s budget as a “broad-based” tax cut.

It is exactly the opposite.

Senate Bill 509 is the controversial tax bill that senators endorsed Monday, overriding a veto by Gov. Jay Nixon. It is a gift to businesses whose owners declare their business incomes on their personal tax forms. Up to one-fourth of their income could eventually be tax-free if the bill becomes law, whether or not they create jobs.

Here’s who would lose if the House also override’s Nixon’s veto:

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Working Missourians.

Persons with taxable incomes of less than $100,000 would realize an average annual tax saving of only $78. A family making $44,000 a year would see a mere $32 tax break. But those families should anticipate paying higher college tuition, more school fees and other costs as the state would be forced to cut services to account for diminished revenue.

Workers employed by the businesses that would benefit from the tax break would end up paying a much bigger state income tax bill than the boss. As Nixon has noted, a business owner reporting $40,000 in adjusted gross income would pay $704 in income tax. An employee reporting the same amount would pay $1,123 in state taxes.

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Other businesses.

Far from being a broad-based tax cut, Senate Bill 509 is another loophole in a chaotic tax structure. Unable to muster the fortitude to reform tax credits and create a fairer system, the General Assembly is proposing yet another favor for a selected group.

Companies not organized as “pass through” businesses would not receive an income tax break. That would lead to creative accounting and unwise business restructuring to avoid paying taxes.

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Missouri’s youth.

Missouri has never been able to fully fund its own formula for elementary and secondary education. More tax cuts would only worsen the shortages. The state’s support for public universities would remain anemic. Child care subsidies and other programs would likely be at risk.

Sponsors insist their bill is cautious and wouldn’t cause revenues to crater as they have in Kansas. But if deep cuts in Kansas haven’t prompted the promised job growth, why would limited cuts in Missouri have that effect?

Taxes in Missouri already are too low to support the services needed for a flourishing economy. House Democrats must hold the line and stop this unfair and destructive bill.

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