Missouri Senate ends week with no consensus on tax cuts. Here are some competing plans
The Missouri Senate gaveled in for the second day of a special session Thursday in which senators referred several tax-related proposals to various committees and then adjourned until next week after less than 30 minutes.
As the first week of the Missouri General Assembly’s special session drew to a close Thursday, it became clear that there is no consensus among legislators on Republican Gov. Mike Parson’s plan to cut income taxes.
Lawmakers in the Senate proposed a flurry of different tax cut proposals this week. Some would cut the state’s income tax rate lower than Parson’s proposal while others make cuts elsewhere like eliminating the state’s corporate income tax.
With lawmakers set to begin sifting through the various proposals next week, here are some of the highlights:
What is Parson’s plan?
Parson’s proposal includes a permanent income tax cut that would lower the state’s top individual income tax rate from 5.3% to 4.8%. It also eliminates the bottom income tax bracket entirely.
Under the proposal, the standard tax deduction would be increased by $2,000 for individuals and $4,000 for joint filers. This means that Missourians will not have to pay income tax on their first $16,000 or $32,000 for joint filers.
Gradual versus immediate cuts
Some of the bills proposed by Missouri senators differ from Parson’s plan in how low the state should lower the top individual income tax rate. The plans floated this week range from 3.9% to Parson’s 4.8%.
It appears that some of the disagreements among senators will be whether an income tax cut should be immediate or gradually trigger in years when the state reaches a certain surplus. Parson’s proposed cut would be immediate.
A bill filed by Sen. Lincoln Hough, a Springfield Republican who will likely be tapped as budget chair next year, would lower the state’s top individual income tax rate to 4.5% instead of Parson’s proposed 4.8%. Hough’s cut would be gradual and trigger once the state reached a surplus exceeding $250 million.
A competing bill filed by Sen. Andrew Koenig, a Manchester Republican, would lower the state’s top income tax rate to 4.8% next year and then gradually decrease the rate to 4.4% over a period of years.
Checks to Missourians?
Two proposals floated by the Missouri Senate include plans to send tax rebate checks to Missourians. Parson previously vetoed a bill that would have sent checks of up to $500 to individual Missouri taxpayers who paid income tax in 2021.
The tax cut proposal filed by Hough would also send a one-time tax credit of $325 to Missourians who make less than $125,000. It would send $650 checks to couples who filed jointly and make less than $300,000.
Another bill filed by Sen. John Rizzo, an Independence Democrat and the only Democratic senator to file a bill so far this session, would also send checks to some Missouri taxpayers.
Rizzo’s bill would increase the value of a credit approved last year for low income Missourians and allow those taxpayers to get refunds related to how much they paid in taxes.
Corporate income tax?
The plan proposed by Parson did not include any cuts to the state’s 4% corporate income tax, however several bills filed in the Senate do.
Koenig’s plan would immediately lower the corporate income tax rate to 3.5%. Starting in 2024, the bill would lower the rate by 0.5% in years where the state has a surplus of at least $150 million.
Two proposals filed by Republican Sens. Mike Moon of Ash Grove and Denny Hoskins of Warrensburg would completely eliminate the state’s corporate income tax.
Unrelated bills
Although Parson called the special session solely to pass the income tax cut and extend tax credits for farmers, several lawmakers filed bills related to other hot button issues in the state.
Those bills are unlikely to pass through the legislature unless Parson expands the special session.
In the House, state Rep. Ron Hicks, a Defiance Republican, refiled his bill that would legalize recreational marijuana through a more open market system than the upcoming Nov. 8 ballot question that would legalize the drug through the state constitution.
Additionally, Rep. Dan Houx, a Warrensburg Republican, filed a bill that would legalize sports betting in Missouri. The legislature failed to come to an agreement on legalized sports gambling last session while neighboring Kansas was able to pass it.
Finally, Sen. Bob Onder, a Lake St. Louis Republican, and Hoskins, filed bills in the Senate that target school curriculum and transgender student-athletes, which were priorities for members of the now-defunct Conservative Caucus last session.
