Missouri Republicans hoping to cut taxes got a bill across the finish line Thursday night, less than 24 hours before the end of the state's legislative session.
The Missouri House voted 101-40 Thursday night to again cut individual income taxes. The Senate amended the bill and passed it 24-9 Tuesday. With a signature from Gov. Eric Greitens, it will become law.
Missouri's top individual income tax rate is set to gradually drop from 6 percent to 5.5 percent under current law if state revenue meets targets. The bill lawmakers passed Thursday would knock another 0.4 percent off the tax rate, bringing it eventually down to 5.1 percent.
The bill's sponsor, House Speaker Pro Tem Elijah Haahr, R-Springfield, said in a statement Thursday was a historic day in Missouri.
"From growing families to the greatest generation, from entrepreneurs to empty nesters, Missourians will pay lower taxes under this proposal,” Haahr said.
Critics have repeatedly compared various income tax cuts supported by Missouri Republicans to an income tax cut abandoned last year by the Kansas Legislature. Haahr pushed back against that comparison on the House floor and called the comparison "played out" and "annoying."
“This tax bill looks nothing like Kansas, and I’m so tired of people saying that any tax cut, a tenth-of-a-point tax cut, is a Kansas-style cut," Haahr said. "This is not a Kansas-style tax cut. It’s not even close. It has nothing to do with Kansas.”
Former Gov. Sam Brownback championed Kansas' tax cuts and said they would be an economic boon to the state, but they knocked a hole in the budget. Fellow Republicans in the Legislature overrode Brownback's veto last year to raise taxes.
The debate marked the second time Thursday that Missouri lawmakers considered a tax cut. Consternation over an incorrect fiscal estimate led House members to send a revised corporate tax cut bill back to the Senate. House and Senate members are expected to hash out differences in a conference committee.
Democrats expressed similar concern over the accuracy of the budget analysis, or fiscal note, that said Haahr's bill would cut just under $6 million from the state's revenue collections.
To minimize the hit on state revenue, the bill also reduces deductions Missourians can take for federal tax liability and caps a tax break for pass-through entities, like LLCs. Missourians would get another 0.1 percent cut if the Supreme Court creates a path for states to collect sales tax from online purchases.
Rep. Crystal Quade, D-Springfield, asked that the bill be sent back for a new fiscal note, arguing it had not been updated since the Missouri Senate removed an earned income tax credit for working families.
That motion, which Haahr called a "stall tactic," failed.
“We have a day left," Quade said. "This is not a stall tactic, to be honest with you all. I just want to know what we’re doing.”
Quade said there was "more than enough time" to send the bill back for a new analysis.
Rep. Jon Carpenter, D-Kansas City, noted the fiscal estimate is on top of the reductions from lawmakers' previous tax cut, which is not yet fully in effect.
"That was a $700 million tax giveaway that we passed a few years ago. It was fiscally irresponsible. It was a bad decision, and so this bill locks into place those cuts," Carpenter said.
The vote split nearly perfectly along party lines. All 101 votes in favor came from Republicans. Three Republicans and 37 Democrats voted against.
Rep. Kevin Engler, R-Farmington, who was critical of the corporate tax cut the House sent back to the Senate earlier Thursday, approved of Haahr's bill, which he called a "much, much, much better bill than we what we had here earlier."
"There was too much guess that it may be here, may be there," Engler said. "This is a lot more prudent way to deal with taxation."
Carpenter said he would not do tax reform the same way but thought Haahr's bill represented a "new leaf of fiscal responsibility." He still opposed it, he said, because it doesn't change Missouri's tax structure, which currently applies the same rate to anyone earning more than $9,000 a year. He also objected because it didn't totally halt the LLC tax break, and it built on top of the previous tax cuts.
“Unfortunately, under this bill, a minimum-wage worker is going to pay the same tax rate as millionaires and billionaires," Carpenter said.
The scope of Haahr's bill was cut down significantly in the Senate.
Originally, it would have cut individual and corporate rates, sought to collect sales taxes from online purchases, included an earned income tax credit, eliminated a property tax deduction for low-income senior renters and increased licensing fees to create a dedicated stream of money for Missouri roads, which the Missouri Department of Transportation says are $825 million short on high-priority needs alone.