$500 checks to Missouri taxpayers? One in three would be left out, nonprofit says
Roughly one-third of all Missouri taxpayers would be left out of a proposed plan to dole out $1 billion in income tax credits, according to a nonprofit that analyzes state budget and tax issues.
House Republicans unveiled a bill last week that is intended to provide tax relief to workers using a large portion of the $1.8 billion in surplus revenue left unspent in the chamber’s proposed budget for the upcoming fiscal year.
The credits, proposed by House Budget Chairman Cody Smith and backed by top Republican leaders, would be a one-time payment and match the amount of income tax money a person owed the state in 2021 — capped at $500 for individuals or $1,000 for married couples filing jointly.
As written, if a person owes $100 in income taxes, they would receive a $100 payment. If a person owes nothing, they would receive nothing.
While supporters of the plan say it would provide economic relief to Missourians struggling with inflation, others say the late-session proposal would exclude low-income residents who don’t have tax liabilities and seniors who rely on Social Security.
“We think that the idea of providing some direct assistance to help folks who are struggling is good, but because this proposal leaves out those Missourians who need it most, we want to make sure that those who are most struggling — for gas or to put dinner on the table — that they would see some relief from this as well,” said Traci Gleason, vice president of external affairs for the non-partisan Missouri Budget Project.
Gleason, reached by phone Friday, said because the bill focuses solely on those with income tax liabilities, one-third of taxpayers would receive no credit. Only about 20% of the lowest earning Missourians (those who make less than $22,000 a year) would receive credit, she said.
She said her organization recommends that the House modify its plan to make all Missourians eligible to receive a credit, instead of just those with tax liabilities.
The bill, which is expected to go before the House Budget Committee on Tuesday, has received strong support from House Republicans who vowed to make it a priority as the legislative session enters its final month.
“As families struggle to make ends meet with the rising cost of inflation, it’s important that we do everything we can to help them keep more of their hard-earned dollars,” Smith said in a statement last week. “The state is fortunate to have a record surplus that we can use a portion of to provide direct economic relief to working Missourians.”
In a joint statement, House Speaker Rob Vescovo, Majority Floor Leader Dean Plocher and Speaker Pro Tem John Wiemann said they “do not support the idea of spending every available dollar to increase the size of government, but instead believe individual Missourians are the best decision makers for how to spend their tax dollars.”
The plan has drawn skepticism from House Democrats, who had proposed an amendment to the state budget that would have provided low and moderate income households with up to $1,000. The GOP-controlled House voted against that measure.
House Minority Leader Crystal Quade, a Springfield Democrat, described the new bill as a “flip-flop” by Republicans.
“Unlike the Democratic version that was targeted toward Missourians who would most benefit, the GOP plan primarily benefits the wealthy,” she said in a statement.
When the bill was announced last week, it appeared to surprise some legislators and the Missouri Department of Revenue.
During a Wednesday committee hearing, Zach Wyatt, legislative director for the Department of Revenue, said he found out about the proposal when he was at the gym. His department had not yet calculated who would qualify, he said.
While the House plan faces an uphill battle as the legislative session draws to a close, tax credits have been discussed in the other chamber leading to some optimism that the bill could meet its tight May deadline.
Late last month, Sen. Lincoln Hough, a Springfield Republican, proposed a bill that would apply a $500 tax credit to a person’s tax liability. More than 3 million taxpayers would be eligible for Hough’s plan, according to a Senate analysis.
