This week, the Senate passed one of my highest priorities, a tax cut for every Missourian who pays taxes. Senate Bill 26 cuts tax rates in Missouri for the first time since the 1920s.
There has been a lot of media coverage about SB 26. The bottom line is that the bill cuts taxes for individuals, corporations and small businesses, with extra cuts for low-income Missourians and businesses. Here is a quick summary of the changes:
• Would lower personal state income tax by .75 percent over a five-year span (from 6 percent to 5.25 percent);
• Would lower corporate state income tax by .75 percent (from 6.25 percent to 5.5 percent) over five years;
• Creates a small business deduction for pass-through business income of 50 percent over five years;
• Creates a $2,000 deduction for those making less than $20,000 adjusted gross income;
• Adds language to help with out-of-state and Internet sales tax collections;
• Specifies no taxes on the first $25,000 of corporate income;
• Increases the sales tax rate by one-half percent (from 4.225 percent to 4.725 percent) over five years;
• And automatically reduces both personal and corporate taxes by an additional .25 percent if the federal government passes the Marketplace Fairness Act.
Most of the discussion around SB 26 revolves around how much it will cost the state. Estimates are that, once implemented over five years, it will reduce revenue by about $477 million. Since we generally grow revenue every year, I don’t foresee that revenues will ever actually drop because of this bill.
Unfortunately, the governor has focused his attention on the small sales tax increase in the bill. That increase is only one-tenth of a cent each year for five years. The governor, who never contacted me in the two months we were working on the bill (including the senators from his own party), chose to use scare tactics to say the bill was designed to hurt seniors and veterans. Since I have sponsored and supported tax relief for both those groups in the past, I was particularly offended by his comments.
What is not often discussed is the cost of doing nothing. If Missouri does not fundamentally change our tax policy, we will fall behind states like Kansas, Oklahoma and other neighbors who are reforming their tax systems. The fiscal impact on the state as businesses and residents choose to leave could be devastating.
SB 26 passed the Senate on a 23-11 vote and is now in the House for its consideration. I will be working with the House Ways and Means chair and with House leadership to make sure it remains a balanced, affordable tax cut for you, your family and your business.
Town Hall Meetings
As we head into our spring break, please keep in mind these town halls and share with your friends and neighbors.
March 18, 2013
Town Hall Meeting
John Knox Village, Manhattan Room
1001 NW Chipman Rd., Lee’s Summit, MO 64081
State Senator Will Kraus-R serves District Eight and is a resident of Lee’s Summit.