Government & Politics

Gov. Parson signs Missouri tax cut long sought by Republican lawmakers

Missouri Gov. Parson’s inner circle

Mike Parson's closest advisers includes longtime friends and veterans of state government.
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Mike Parson's closest advisers includes longtime friends and veterans of state government.

Gov. Mike Parson on Thursday signed a bill cutting Missouri’s individual income taxes, a key legislative goal of the state’s Republican lawmakers and one widely criticized by Democrats.

The new law will deepen individual income tax cuts, limit some deductions and exemptions, and cap a tax cut for pass-through entities, including LLCs.

Republicans argued that income tax cuts would allow Missourians to keep more of their money and would generate economic activity in the state, but Democrats worried the bill would knock a hole in the state’s already-tight budget. They compared various Republican tax cuts to those Kansas passed under then-Gov. Sam Brownback and later abandoned.

In a news release after a signing ceremony in Springfield, Parson said the bill was the “first step in an ongoing process.”

“We need to continue to make the Missouri tax code simple and fair,” Parson said. “This is only the beginning of our plan to keep more money in the pockets of Missourians and Missouri small businesses. I look forward to working with the legislature long term to identify ways to continue to offer broad-based tax relief.”

Rep. Gail McCann Beatty of Kansas City, the House Democratic leader, was critical of the bill, saying “tax cuts have consequences.”

“For more than a decade, Republicans have repeatedly cut state taxes, and as a result, Missouri has stumbled from one budget crisis to the next,” McCann Beatty said in a statement. “The idea that cutting taxes results in revenue growth has been proven a fantasy time and again. With this new round of tax cuts, another round of cuts to basic state services will be coming.”

Missouri Republicans set out this spring to cut individual and corporate income taxes in a massive package that also would boost revenue for the state’s transportation infrastructure. After several attempts, they pushed through two bills cutting individual and corporate rates. Parson signed the individual income tax cut Thursday.

The state’s taxes are already set to gradually drop — to 5.5 percent from 6 percent — provided the state meets revenue targets. The new law will deepen the cuts to 5.4 percent in 2019 and gradually cut taxes to 5.1 percent if the state collects enough revenue.

A state estimate says the law will reduce Missouri state revenue by $5.8 million once it’s fully implemented, but the liberal-leaning Missouri Budget Project says the bill will boost state revenue by $60 million because of the reforms paired with the cut.

Jeremy Cady, state director for Americans for Prosperity in Missouri, said the organization was pleased to see the bill signed to “provide working families with much-deserved tax relief.” AFP is tied to conservative billionaires Charles and David Koch.

“While more work is required to make Missouri’s tax code more fair, flatter and simpler, legislators are heading in the right direction in providing more tax relief and reducing the size of government,” Cady said in a statement. “We look forward to working with Gov. Parson and the legislature next year on how to deliver more tax relief to small business and families and create a tax code that encourages more economic growth.”

Amy Blouin, executive director of the Missouri Budget Project, said tax reform should make the code more fair and meet the needs of communities.

“The legislature wisely backed off of their proposals that would have gutted state investments in Missouri communities,” she said in a statement.