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Haahr sponsoring proposal to cut Missouri’s income tax

Tim Bommel | Missouri House Communications
Rep. Elijah Haahr, R-Springfield, presents HB 2540 before the House Ways and Means Committee.

The latest proposal to cut taxes in Missouri is in the hands of a state House committee.

The measure would reduce the top state income tax rate on individuals and corporations to 5 percent. It’s currently at 5.9 percent for individuals and 6.25 percent for corporations. The bill is sponsored by House Speaker Pro-tem Elijah Haahr, R-Springfield.

“We’ve seen other states around the country do tax reform over the last decade, (and) we’ve tried to learn from the ones that did it right and the ones that did it a little too aggressively,” he said. “We’re trying to find that safe middle road that helps our state, moves us forward, and keeps our financial house in order.”

Haahr presented the bill Monday afternoon before the House Ways and Means Committee.

“This would signal to businesses and individuals around the country that Missouri is open for business, that our goal is to compete for economic competitiveness, and that we would be the tip of the spear when it comes to that,” he said.

The bill would also generate more money for roads and bridges by indexing user fees for license plates and registration to the rate of inflation, instead of raising the state’s fuel tax as some other lawmakers are proposing. That language has the backing of the Missouri Chamber of Commerce and Industry.

Credit Eric Greitens via Facebook
Gov. Eric Greitens unveiled his tax cut proposal during visits to Kansas City and Springfield on Jan. 30.

  “We’ve seen gas tax proposals (fail),” said the chamber’s Matthew Panik. “This is a new way to look at it, and we see great value in bringing a lot of money into the transportation system for the state.”

The bill would also have Missouri join the multi-state Streamlined Sales and Use Tax Agreement, which Haahr said would put Missouri-based retailers on the same footing as online retailers. Business interests are split on that portion of the measure, with the Missouri Chamber supporting it and the Retailers Association opposing it.

“Streamlining puts our definitions in line with 23 other states – in the past we thought we had worked through that, but I’m not so sure anymore in regards to sourcing, which means destination,” said Missouri Retailers Association CEO David Overfelt. “Typically, a Missouri retailer collects a sales tax only at their location, regardless of whether they deliver or not – this would make Missouri retailers who deliver now have to collect sales tax rates wherever they deliver to, which will make it a little bit more complex.”

Jay Hardenbrook from the American Association of Retired Persons testified against the bill, because it would also make senior renters ineligible for a housing tax break known as the circuit breaker.

“This is truly a tax increase for the lowest income seniors, disabled veterans, and people with disabilities in the state of Missouri,” he said. “That is of serious concern for us, to raise their taxes in order to cut other people’s (taxes).”

No action was taken on the measure Monday.

Haahr’s bill goes farther than Gov. Eric Greitens’ proposal to lower the income tax rate to 5.3 percent, but not as far on corporate taxes as two other bills filed by Rep. Travis Fitzwater, R-Holt Summit, and Sen. Bill Eigel, R-Weldon Springs.

Credit Jason Rosenbaum | St. Louis Public Radio
Republican Sen. Bill Eigel of Weldon Spring

  Fitzwater’s bill would drop the state income tax rate to 4.8 percent for individuals making more than $8,000 a year. It would also place an overall cap on tax credits of $425 million a year and raise the state’s fuel tax by six cents a gallon.

Eigel’s proposal would reduce the state income tax rate to 5.25 percent for individuals making more than $8,000 a year, and drop it to 4.25 percent for corporations. It would gradually phase in a fuel tax hike of six cents per gallon, and it would cap the low income housing tax credit at $135 million a year. But that particular tax credit program is currently inactive as Greitens successfully pushed the Missouri Housing Development Commission to not issue any incentives this year.

The governor’s proposal, which is not yet in the form of a bill, would lower the state income tax rate to 5.3 percent for individuals and to 4.25 percent for corporations. It would not, however, raise the state’s fuel tax.

House Democratic Floor Leader Gail McCann Beatty of Kansas City opposes them all.

“I think we need to look at what does that do to our bottom line in terms of revenue that comes into the state – I think that’s the biggest question we have when we start talking about tax cuts,” she said. “When we are having a difficult time funding higher ed – we had a big debate today as it relates to transportation for K-12 and the fact that we’re not properly funding those.”

Follow Marshall on Twitter:@MarshallGReport

Marshal was a political reporter for St. Louis Public Radio until 2018.