Missouri Sen. Will Kraus said last year after Gov. Jay Nixon vetoed a proposed tax bill sponsored by Kraus that he would continue to push for the cuts.
Now after discussions with Nixon, the Republican from Lee’s Summit is closer than ever in obtaining the tax relief he sought – but with a few concessions.
Kraus’s latest proposal – spearheaded by talks with Nixon – that he plans to put forward this week would provide a .25 percent (from 6 percent to 5.75) reduction to the individual income tax rate effective only after the K-12 foundation formula, currently under-funded by more than $550 million, is fully funded, and only after $200 million in revenue growth.
The legislation would also provide an additional .25 percent (to 5.5 percent) reduction to the personal income tax rate effective after legislation is enacted to reduce low income housing tax credits to $110 million annually from its current $135 million and historic preservation tax credits to $90 million annually from where it stands now at $140 million.
“I believe that the concessions that were put out by the Governor, we’re going to accomplish in the next three years regardless if we pass this bill or not,” Kraus said via telephone Feb. 17 from his office in Jefferson City. “I believe we are going to fully fund the education formula in the next three years...the tax credit reforms, I think we’re really close in getting a reform package done; it’s just a matter of working that through. I believe these things are going to happen.”
The previous bill sponsored by Kraus that Nixon vetoed would have phased in a 50 percent deduction for business income reported on individual income tax returns over five years. It also would have gradually cut the state’s top individual income tax rate of 6 percent to 5 percent over a decade, with each year’s reduction taking place only if yearly state revenue grew by at least $100 million.
The business cuts were chief among the concessions made between Kraus and Nixon.
In a Feb. 13 address to the Missouri Press Association, Nixon said that he has never been opposed to making responsible changes to the state’s tax code, the sixth lowest in the nation. The Democratic governor insisted on “protecting and investing in our public schools, reining in wasteful tax credits that benefit special interests, and putting more money into the pockets of working Missourians.”
“These are the basic elements of a sensible and sustainable tax bill that I would sign,” Nixon said. “And I’ve made clear to leaders that if a bill gets to my desk that violates these principles, I will not hesitate to veto it. I said in my State of the State address that I would not support anything that takes money out of our classrooms, and I meant it.
“That’s why I am pleased to report that Senator Kraus has indicated he plans to put forward a bill that would cut individual income taxes for working Missourians – only after Missouri’s K-12 foundation formula is fully funded and with significant savings from reforming our most costly tax credit programs, but without ill-conceived handouts to corporate partnerships.”
“In order to get a tax (cut) in Missouri, there are three ways to do it,” Kraus said. “There’s one, you can pass a bill and the Governor can sign it; that’s probably the easiest to get a bill done. No. 2, you can try to override the Governor’s veto, which we tried last year and failed. Or No. 3, you can take it to the vote of the people. I believe in working with the Governor and coming together with guidelines and that he is willing to sign the bill.
“Now, I have to work with my colleagues because we’ve got that part done. The Governor has come out publicly and said these are the things that have to be in the bill in order for me to sign them. Now I’m working with my colleagues to see if that is something we can get through the General Assembly.”