Currently, the Republicans have 108 seats, down two (because of resignations) from the 110 with which they started the Ninety-Seventh General Assembly in 2013. One Democrat resignation has taken place since then, but none of the three positions have been filled as yet. It takes a two-thirds majority to override a governor’s veto—or 109 votes. If there aren’t 109 votes before the end of Session, we will have to wait until results come in from the August Special Election to fill the vacant seats—in the hope of re-establishing a two-thirds majority before the September Veto Session.
Senate Bill 509 is somewhat similar to last year’s tax cut bill, HB 253. That bill failed by fifteen votes in an override attempt of the governor’s veto last September. Though SB 509 is simpler and addresses many of the problems that plagued HB 253, HB 253 was more complex in that it would have cut taxes further if the U.S. Congress had passed a law allowing states to more easily collect sales taxes on online purchases. That didn’t happen; however, the fear of its potential passage was used by the opponents to help defeat the bill. There was also a drafting error that would have imposed a state sales tax on prescription drugs. This error could have been fixed legislatively, but it worked against the bill’s passage.
SB 509 will gradually cut Missouri’s top individual income tax rate from 6% to 5.5% and phase in a new 25% deduction for business income reported on personal tax returns. The tax cuts will only occur if state revenues increase by $150 million. Furthermore, the bill will increase deductions for low-income residents and adjust Missouri’s tax brackets based on inflation. Supporters say SB 509 addresses more of the governor’s concerns by calling for a smaller tax cut with more safeguards.
Missouri isn’t alone in trying to reduce taxes in order to spur economic growth. Tax cutting legislation is part of a national trend as state revenues begin to rebound from the recession. In 2013, eighteen states passed some type of tax-cutting measures. This year several more states have already cut taxes, including Democrat-led New York and Republican-led Wisconsin.
The SB 509 tax cut is especially structured to help ease the tax burden on small businesses. In Missouri, small businesses make up more than 90 percent of our state employers. While Missouri revenues continue to increase, the state’s GDP (Gross Domestic Product) remains stagnant—nationwide, Missouri ranks 37th in GDP. Consequently, this pro-job, tax-cutting bill will incentivize growth and put money back into the hands of tax-paying citizens.
The new tax bill, if passed, doesn’t go into effect until 2017. The benefits in SB 509 are only triggered when the highest net general revenue collected from the previous three fiscal years is exceeded by at least $150 million. The design of this tax-cutting bill is to grow Missouri’s economy so there will be more monies available to fund vital state programs as we move into the future.