Missouri Gov. Parson sets special session for sweeping income tax cut and farmer tax credits
Missouri Republican Gov. Mike Parson announced on Monday that state legislators will return to Jefferson City on Sept. 6 for a special session to pass a sweeping income tax cut and extend tax credits for farmers.
The two tax plans will be introduced in the Missouri Senate under one bill, Parson said. The proposed permanent tax cut, if approved, would lower Missouri’s top individual income tax rate from 5.3% to 4.8%. The agricultural tax credit plan would reauthorize a variety of tax credits for farmers that would expire after six years instead of the two year sunset that lawmakers approved this year.
“My team and I have been working with our colleagues in the General Assembly and agriculture partners to formulate a plan to adequately extend our critical agriculture tax credit programs and pass the largest income tax cut in state history,” Parson said.
“Today, we believe we have that plan and are ready to call legislators back to Jefferson City to get to work on behalf of our farmers, ranchers, and business owners and provide lasting tax relief to every taxpaying Missourian.”
Parson’s announcement came after his July decision to veto two tax proposals approved by lawmakers. The first measure would have sent one-time payments to Missourians who owed income tax in 2021 — capped at $500 for individuals or $1,000 for married couples filing jointly. Parson said the proposal was rushed and would have left out a large group of Missourians.
The governor has touted his new plan as an opportunity to provide yearly savings to Missourians instead of a one-time payment. On top of lowering the top individual income tax rate, Parson’s plan also eliminates the bottom income tax bracket.
“Our tax cut proposal means that every taxpaying Missourian, no matter their background, income, or job description, will see a reduction in their tax liability,” Parson said. “Every Missourian will earn their first $16,000 tax free and married joint filers will earn their first $32,000 tax free, resulting in significant savings for millions of Missourians.”
The second proposal would have extended tax credits for farmers with a two-year sunset provision. Parson balked at the plan, arguing that two years was not enough time for farmers to start new projects with the credits.
Over the last several weeks, Parson has floated his plans to both Republican and Democratic lawmakers. The governor is expected to travel across the state to St. Joseph, Kansas City, Bridgeton, Columbia, Kirksville and Springfield this week to promote the two proposals.
Parson’s announcement drew swift criticism from Democrats and a non-partisan state budgeting advisory group Monday.
“The governor’s special session is an election season ploy to change the subject after suddenly discovering that eliminating Missourians’ reproductive rights isn’t the winning issue Republicans thought it would be,” House Minority Leader Crystal Quade, a Springfield Democrat, said in an emailed statement. “It is also a textbook example of fiscal irresponsibility.”
The statement continued, “A cardinal rule of responsible budgeting is don’t use temporary revenue to take on permanent expenses. Yet the governor’s plan uses a temporary budget surplus as cover for a permanent loss of revenue that will put Missouri government back into the financial hole it just climbed out of. House Democrats are wary of jeopardizing the state’s financial future for politically motivated tax cuts that, as usual, primarily benefit the wealthy.”
Quade said Parson’s agricultural tax credits plan was “opening the door to all manner of taxpayer-subsidized handouts for the governor’s friends.”
Supporters of the tax rebate plan that Parson vetoed in July said that it would have provided economic relief to Missourians struggling with inflation. However, others criticized the GOP-led proposal and said it would have excluded low-income residents who don’t have tax liabilities and seniors who rely on Social Security.
While representatives from the Missouri Budget Project, a nonprofit that analyzes state budget and tax issues, applauded Parson’s veto of the proposal in July, the group criticized his plan Monday. Amy Blouin, the group’s president and CEO, said in a statement that the income tax cut would require cuts to state services similar to what Kansas saw under former Gov. Sam Brownback.
Brownback signed legislation in 2012 to slash state income tax rates across the board in Kansas and zero them out entirely on limited liability companies and other pass-through businesses. Kansas grappled with multiple years of budget shortfalls before reversing the tax cuts just five years after their passage in 2017.
“While Governor Parson focused on how certain struggling individuals might pay less in taxes, the proposals discussed today remain heavily weighted to benefit the wealthiest Missourians,” Blouin’s statement said.
“Missouri can’t afford to enact the failed Brownback tax failure that devastated Kansas’ budget. With Brownback’s policies, a budget surplus became a deficit, lawmakers had to make repeated and drastic cuts to state services, and the state’s economy suffered. After years of budget crises, that state’s Republican legislature reversed course and repealed most of the tax cuts.”
This story was originally published August 22, 2022 at 2:59 PM.
