Last week the Senate perfected the most comphrehensive tax reform package since the state began its current income tax collection system. Unlike the last major change, a tax increase by Governor Warren Hearnes that overturned a vote of the people not to raise taxes, this package reduces taxes across the board for all!
Governor Nixon who continues to follw his modus operandi of being AWOL when important issues are discussed in the legislature, has decided to get engaged. It’s interesting that he uses a page from Barack Obama’s “the sky is falling” sequestration book!
You recall that the President claimed the world as we know it would cease to exist if sequestration were to happen. Everyone woke up the day of sequestration and the world had not ended.
Similarly, Governor Nixon makes an equally false claim that the bill perfected by the senate, SS#2 SB26 is a tax increase. If he was more engaged in the process, he would know that the bill is actually projected to CUT taxes by $450 million.
So how can the Governor so stridently hit the class warfare argument as hard as he does in his sudden opposition to SB26? He relies on the portion of the bill that includes an increase in the state sales tax from 4% to 4.5% over a period of five years. If that is all the bill did, it would indeed be a tax increase. But it isn’t all it does and it does not represent a tax increase.
Aside from the sales tax issue above, let’s look at the changes in the income tax system.
- Everyone gets a tax cut. The act reduces the maximum tax rate on personal income by 0.75% over a period of five years. For all tax years beginning on or after 2018, the maximum tax rate will be 5.25%. If the federal government pass the Marketplace Fairness Act of 2013, or similar legislation, the maximum rate of tax on personal income will be reduced an additional 0.25%. (Sections 143.011 & 143.021)
- Government recognzies the real job creators – small business. The act creates an individual income tax deduction for business income and phases it in over a five-year period. Taxpayers will be allowed to deduct five percent of business income for the 2013 tax year and, once fully phased-in, will be allowed a fifty percent deduction for all tax years after the 2016 tax year. Shareholders of S corporations and partners in partnerships will be allowed a proportional deduction based their share of ownership. (Section 143.022)
- Large corporations also get some relief. The act reduces the tax rate on corporate income by 0.75% over a period of five years, beginning with the 2014 tax year. For all tax years beginning on or after January 1, 2018, the tax rate on corporate income will be 5.5%. If the federal government pass the Marketplace Fairness Act of 2013, or similar legislation, the maximum rate of tax on personal income will be reduced an additional 0.25%. The act also exempts the first $25,000 of corporate income from taxation. (Section 143.071)
- Low income individal receive additional tax relief far exceeding a half-cent sales tax increase. In addition, to the reduction of the top tax rate outlined in the first point, the act increases the exemption amount by $2,000 (on top of the $2,100 deduction already provided) for individuals with a Missouri adjusted gross income of less than $20,000. (Section 143.151)
Other elements such as participating in the Streamlined Sales Tax consortium and closing some loopholes in the definition of Nexus are included in the bill. All in all out, the bill reduces taxes signficantly and does so for all.
Missouri has lagged it’s neighboring states and all but two of the 49 other states in Gross Domestic Product (GDP) through the first decade of the 21st Century. Now, we see Kansas taking bold steps and attracting the real job generators in this country, small businesses. Missouri has seen almost $1.6 billion in wealth flee the state since 1995. The Governor’s defense of the status quo and special interests is not acceptable.
The Governor has falied to show leadership in improving Missouri’s economy. Now that the legislature is taking on much needed reform, he is defending the status quo and special interests. That’s not what Missouri needs.
Missouri needs and deserves a Governor that is willing to be a part of the process and be truthful, not speak out solely because he wants to stake out a more leftist position for his politcal future.