Missouri Tax Reform, ‘The Sequel’ Starts Again January 17, 2014

(AP) – Kansas is again being held forth as the prime example in Missouri’s renewed debate over whether to cut income taxes.
But rather than being touted primarily by tax-cut proponents, Kansas also was cited Thursday by tax-cut opponents concerned about the potential for falling state revenues and inadequate school funding.
A Republican-led Senate committee heard testimony on a trio of proposals – one cutting taxes only on business income, another reducing the individual income tax rate and a third phasing in tax cuts for both businesses and individuals.
The panel is expected to advance some combination of those proposals in coming weeks as majority-party Republicans try again to enact an income tax cut after Democratic Gov. Jay Nixon vetoed last year’s legislation.
“We are here for the sequel. Hopefully, it’s better than the original in the outcome,” Sen. Eric Schmitt, a Republican from suburban St. Louis who is sponsoring two of the bills, said as the Senate Ways and Means Committee began its deliberations.
As they did last year, lobbyists for business groups again pointed to tax cuts in Kansas and other neighboring states.
Over the past two years, Kansas has exempted the owners of 191,000 businesses from income taxes and sliced tax rates for individuals. Six of Missouri’s eight neighboring states enacted some sort of tax cut last year.
“We are surrounded by states that are beckoning our businesses and citizens to come to them,” said Woody Cozad, a lobbyist for the Gate Way Group, which represents various business interests and mega-political-donor Rex Sinquefield.
Missouri lawmakers are particularly concerned that businesses in the Kansas City area will relocate across the state line to take advantage of the new tax savings.
But opponents of an income tax cut said Missouri already is ahead of Kansas in economic indicators and could jeopardize funding for state services if it followed Kansas’ example.
Kansas revised its financial outlook downward in November. It forecasts that its 2014 general revenues will fall 7.6 percent short of the previous year and 8.7 percent shy of what the state collected in 2012.
The falling revenues have made it more difficult for Kansas to recover from previous education funding cuts that have left basic per pupil aid 13 percent lower than its peak in 2008.
Although Missouri hasn’t cut public school funding, its basic school aid is about $600 million short of what’s called for under state law. If Missouri income taxes are cut, it “may be utterly impossible” to catch up on school funding, said Otto Fajen, a lobbyist for the Missouri chapter of the National Education Association.
Legislative researchers project that a gradual 50 percent tax deduction for business income, which one of the bills proposes, could eventually cost the state $148 million annually.
But the Missouri Budget Project, a St. Louis-based nonprofit that analyzes fiscal issues with an eye on the poor, puts the potential cost at more than $500 million. The costs could be higher for other
A bill by Sen. Will Kraus, R-Lee’s Summit, would reduce the individual income tax rate to 5 percent, create a 50 percent deduction for business income, expand deductions for low-income individuals and exempt corporations’ first $25,000 of income from taxes.
It’s projected by legislative researchers to cost $945 million annually when fully implemented; the Missouri Budget Project puts its eventual cost at $1.8 billion. Tax-cut supporters contend the revenue loss could be made up at least partly by expanded payroll and sales taxes generated by businesses that use their tax savings to hire additional employees and expand operations. But Amy Blouin, executive director of the Missouri Budget Project, cast doubt on such assertions. She estimated Missouri businesses would have to create about 250,000 jobs to offset a $500 million tax cut. “We would have to practically import people from other states to create that level of growth,” Blouin said.

Kansas ‘Border War’ Casts a Big Shadow in Missouri House Tax Talks April 2, 2013

(AP) – Kansas remains the reference point as Missouri lawmakers consider whether to cut income taxes and raise the state sales tax.

During a House committee hearing Tuesday, business groups argued Missouri must cut income taxes to keep employers from being lured across the western border by recent tax cuts in Kansas.

But education officials pointed to budget gaps in Kansas and expressed fears that schools could lose funding if Missouri cuts its tax revenues.

The hearing came as a St. Louis-based nonprofit group called The Missouri Budget Project began airing ads opposing the legislation while citing the potential loss of $960 million of revenues annually.

Kraus Blasts Nixon for “Scare Tactics” on Tax Reform March 12, 2013

Missouri State Senator Will Kraus, of Lee’s Summit, accused Governor Jay Nixon and his staff of not fully understanding the tax reform bill Kraus is pushing in the State Senate.
In a Tuesday morning statement, Kraus said, the Nixon administration did not approach him about the details of the measure during the months it was being drawn up.
“It is clear that the governor and his staff read only half of SB 26, and that they are content with using scare tactics to advance their agenda,” Kraus said in a Tuesday morning statement.
The Associated Press reports, “Nixon has written to every state senator urging a “no” vote on the legislation when it comes up for a roll call later this week. The Republican-led Senate gave the measure initial approval last week by voice vote.”
The tax reform bill is designed, in part, to address concerns about the so-called, ‘Border War’.
That’s a reference to Kansas tax cuts that may be luring Missouri businesses in the Kansas City area and along Missouri’s western border to re-locate to Kansas.
The measure, among other things, reduces the state income tax by three-quarters of a percent over 5 years.
Nixon says the measure would harm low-income Missourians and veterans.
Kraus, a member of the Missouri national Guard takes an exception to that.
“For the governor to suggest that I, as a veteran and current member of the National Guard, would harm veterans is offensive. Missourians deserve the truth, and the truth is that SB 26 represents an affordable tax cut that will save every taxpayer money,” Kraus said.

Missouri Tax Reform Plan to Counter Kansas Emerges November 29, 2012

(AP) — A Republican state senator from St. Louis County plans to sponsor legislation trimming taxes for Missouri businesses.
The bill eventually would cut the corporate income tax rate in half and create a 50 percent tax deduction for business income. The tax cuts would be phased in over five years.
Sen. Eric Schmitt, who leads the Senate’s economic development committee, will sponsor the bill. Schmitt says the tax cuts would signal Missouri’s willingness to help large and small businesses.
Missouri legislative leaders have said they would seek changes to the tax code to spur economic development during the 2013 session. Those efforts come after Kansas passed significant tax cuts earlier this year.

Sinquefield Adds $1.2 to Tax Reform Drive in Missouri January 26, 2012

Mo. (AP) – A group pushing to replace Missouri’s income tax with a broader sales tax said Thursday it has received a million-dollar contribution from a prominent Missouri businessman.

The committee Let Voters Decide said businessman Rex Sinquefield donated $1.224 million to its effort. That is the second large-dollar donation supporters of the tax change have received from Sinquefield, who also contributed $1.3 million in the fall.

Let Voters Decide is working to put a state constitutional amendment dealing with taxes before voters. It is pursuing an initiative petition and supports similar measures that have been filed in the state Legislature. The group’s president, Travis H. Brown, said money from the most recent contribution could go toward an ongoing legal fight over the initiative petition, voter-outreach efforts and helping to build support for the state legislation.

Supporters of abolishing the income tax in favor of a broader sales tax contend it will help improve Missouri’s economy. The intent is to broaden the sales tax base to offset the revenue the state would lose by scrapping the income tax.