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Jetton calls for end to tax on Social Security benefits
JEFFERSON CITY, Mo. -- House Speaker Rod Jetton said Thursday that recipients of Social Security benefits should not have to pay state income taxes on them.
"They've already paid taxes on this money once. There's no point in making them pay it twice," said Jetton, R-Marble Hill.
Jetton's proposed tax cut would exempt all Social Security benefits, including survivor benefits for minor children, from taxes. Federal law already exempts individuals who earn less than $27,000 per year and couples who earn less than $32,000 from paying taxes on their Social Security benefits.
The Department of Revenue reports that in the 2004 tax year, the most recent year available, the state brought in more than $87 million from the tax. Jetton estimated that the proposed tax cut would cost the state $105 million each year.
Jetton said he hoped cutting taxes on Social Security benefits would be the first step in eliminating the state's income tax. A report released last fall by the Show-Me Institute, a not-for-profit St. Louis group that promotes free-market policies, proposed phasing out the income tax in increments.
"My goal would be to eliminate all income taxes if we could get there," Jetton said.
Gov. Matt Blunt said cutting taxes was one of his three priorities for the legislative session, but he would not say whether he agreed with Jetton's plan for eliminating the tax on benefits from the federal entitlement program.
A tax plan from Rep. Clint Zweifel, D-Florissant, would cost about as much as Jetton's but use existing programs to extend the tax relief.
"I think we can do better. If you look at the data behind the proposal, it's a giveaway to the wealthiest Missourians," Zweifel said.
Zweifel proposed expanding the state's property tax credit and creating a new earned income tax credit that follows a federal model.
Zweifel said property taxes are a bigger concern than Social Security benefits for the seniors with whom he has worked.
Amy Blouin, the executive director of the Missouri Budget Project, a St. Louis-based organization that analyzes fiscal issues for the effect on the poor, said it would be better to use additional money for existing services rather than a tax cut.
Blouin said the proposed tax cut would help the wealthiest seniors the most. She said about 43 percent of Missouri's seniors would not even be affected by the proposal because they fall under the federal caps.