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Tax Cut Bill Changes Focus To Tax Credit Reform, Sparks GOP Fight

Marshall Griffin/St. Louis Public Radio

A proposed tax cut that conformed to conditions laid out by Gov. Jay Nixon was radically altered Monday in an effort to move the overall proposal forward.

The sponsor, state Sen. Will Kraus, R-Lee's Summit, offered a substitute version of Senate Bill 509 that now primarily addresses tax credit reform.  Instead of triggering a tax cut once K-12 schools are fully funded, the bill would now cap low-income housing tax credits at $110 million a year from $140 million a year and cap historic preservation incentives at $90 million a year from the current $140 million a year.  The change in language has not stopped a group of fellow Republicans from blocking the bill.  State Sen. Eric Schmitt, R-Glendale, described the new language as "waving the white flag" in the battle over tax cuts with the Democratic governor.

"All of a sudden, we're doing something now that's related to bills in a different committee. I mean, we've talked about these issues for a few years, but I just don't know why we wouldn't deal with a tax cut," Schmitt said.  "We're going to have an opportunity to deal with this whole economic development/tax credit reform issue. I mean, it's not like we're not going to deal with that this year. It's  just a question of whether we can get it across the finish line or not…I don't know why we're abandoning a tax cut on March 10th."

In response, Kraus said he believes tax credits have to be reformed, particularly the tax cuts for historic preservation and low-income housing, before a tax cut can become law. 

"It's great to come onto the floor of the Senate and say, 'I want a tax cut, (and let's) make it as large as we can possibly get it,' (but) the reality is that's not going to become law," Kraus said.

Kraus, however, laid his bill aside as fellow Republicans continued their filibuster.  It's unknown at this point if it will be brought back up again for consideration.

There is a proposed tax cut of sorts in the latest version of Kraus' bill.  It would provide a $1,000 tax deduction for any Missourian who makes less than $20,000 a year, and that person's spouse would also receive a $1,000 deduction if he or she also makes under $20,000 a year.

Kraus filed his latest substitute bill on the same day that state Auditor Tom Schweich, a Republican, released an audit stating the low-income housing tax credit program is not as efficient as it could be.  When asked for comment, a spokesman for Kraus said that the timing of the audit and the change in language in his bill were in no way related.

Follow Marshall Griffin on Twitter:  @MarshallGReport

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