Missouri lawmakers send GOP-led income tax cut plan to Gov. Mike Parson’s desk
The Republican-dominated Missouri House on Thursday sent to Gov. Mike Parson’s desk a bill that would lower the state’s individual income tax rate.
The bill, approved by the Senate last week, passed the House on a vote of 98-32 . It would lower the top state income tax rate from 5.3% to 4.95% starting next year. The top state income tax rate applies to Missourians who make roughly $22,000 or more a year. If the state experiences revenue growth, the rate would drop to 4.5% when the plan is fully implemented in five years.
Parson celebrated the passage of the legislation, which he promised to sign.
“We are thrilled that the General Assembly has answered our call to cut Missourians’ taxes and return some of their hard-earned dollars. We called this special session to pass and extend critical support to our agriculture industry and reduce Missourians’ income tax burden, and that’s exactly what we are accomplishing,” Parson said in a statement.
“Today’s action will provide real relief to taxpaying Missourians. Relief that is even more critical now as Missouri families face rising grocery bills, high gas prices, and record inflation.”
However, an analysis of the plan published this month by the Missouri Budget Project, a nonprofit that analyzes fiscal policy, found that the bill would leave out one-third of Missourians. It also found that taxpayers making $22,000 or less would each receive an average cut of $3, while those in the top 1% would receive an average cut of $4,214 next year.
“The General Assembly has once again passed big tax changes that disproportionately help the wealthiest and leaves out one-third of Missourians altogether,” said Amy Blouin, president and CEO of the Missouri Budget Project. “Millionaires will get thousands of dollars from the bill, but those middle-income folks who actually do see a cut won’t get much help in the face of today’s rising costs.”
The legislation is a modified version of the Republican governor’s initial proposal to lower the state’s income tax rate to 4.8%. Parson’s plan did not call for gradual cuts.
House Republicans on Thursday painted the legislation as a smart way to lower Missourians’ income tax burden using the state’s revenue surplus.
“This is a very measured, very conservative move in the right direction,” said state Rep. Doug Richey, an Excelsior Springs Republican. “And it does get us to a place in the future, over an extended period of time, to 4.5% which is a good move.”
The bill has been criticized by Democrats in both chambers who argue that the plan tilts the scale in favor of wealthy Missourians.
“Well, here we go again — another tax cut for the wealthy,” state Rep. Peter Meredith, a St. Louis Democrat, said on the floor Thursday. “Doesn’t do much for working class folks, does absolutely nothing for the lowest income folks and folks on fixed incomes.
“Somehow we think that’s going to be good for our economy. How many times do we have to try this experiment, watch it fail, in order to realize that’s not how we grow our state?”
An initial version of the House’s plan would have gradually eliminated the state’s corporate income tax rate, which is set at 4%. State Rep. Rasheen Aldridge, a St. Louis Democrat, also successfully tacked on an amendment to that plan that would have lowered the sales tax rate of diapers and menstrual health products from 4.2% to 1.2%.
However, Parson told reporters Thursday that an elimination of the corporate income tax rate did not align with his special session call and he would not sign the proposal. House leadership later employed a procedural move that removed all amendments from the bill — a move criticized by Democrats because it also stripped out Aldridge’s amendment.
“If we’re holding a special session to ease the tax burden on Missouri families, we should pass focused, narrow legislation that helps them while allowing Missouri to remain fiscally responsible,” Aldridge said in a statement.
Both chambers of the General Assembly are scheduled to be back at the Capitol next week to pass a set tax credits for agricultural companies. The income tax cut and agricultural credits are part of Parson’s special session call. Parson called for the special session after vetoing two tax-related proposals earlier this year.
Parson had repeatedly refused to expand the special session for other issues, including marijuana and sports betting, but on Thursday he announced he would be modifying the session to include additional agricultural legislation.
State Sen. Lincoln Hough, a Springfield Republican who sponsored the income tax bill in the Senate, said in a statement that the legislation would allow Missourians to keep their hard-earned money.
“In addition to immediately easing the burden of near-record inflation and providing the largest income tax cut in state history, this legislation establishes a fiscally-responsible blueprint that will continue to provide tax relief to hardworking Missourians for years to come,” Hough said.
This story was originally published September 29, 2022 at 2:18 PM.
