Sunday, September 8, 2013
House Bill No. 253
"Broad-based tax relief act"
Few things get people riled up like taxes -- specifically, about paying too much. With an economy that remains sluggish, it's understandable why people watch their pocketbooks.
Many states, including Missouri's neighbors Kansas and Oklahoma, are seeing changes to their tax codes. But here, Gov. Jay Nixon has vetoed legislation that would implement marginal tax cuts for businesses and individuals. The Missouri Legislature should override his veto of House Bill 253.
There's been no shortage of debate over this issue. Supporters of a veto override say the tax cuts would help grow the state's economy. Opponents have presented concerns over parts of the bill, including a tax on prescription drugs, and perceived cuts to education.
These tax cuts are not huge. For individuals, it cuts the top rate by 0.5 percent over 10 years -- and this is implemented only if state tax revenues are at least $100 million more than collected in any of the preceding three years.
Individuals with business income would receive a deduction phased in over five years, starting with a 10 percent deduction in 2014.
Businesses would see a 3 percent tax cut over 10 years. Again, this would only be implemented if revenues are $100 million or more than collected in any of the preceding three years. Once completely phased in, the rate would be 3.25 percent.
These are modest proposals, even if the governor likes to spin scare stories about them.
Debates around fiscal issues typically center around tax increases or spending cuts. However, it's important not to neglect economic growth. We believe tax cuts help grow the economy. Less taxes means individuals have more money to spend. Businesses can use the savings to reinvest in the company or hire new people.
With Oklahoma and Kansas implementing significant reforms, not addressing Missouri's tax code would be problematic. We've heard of businesses on the west side of Missouri that have decided to move operations across state lines to capitalize on the more friendly tax code.
It looks to be a close vote in the House, while the Senate is poised to override. Regardless of whether the General Assembly overrides Gov. Nixon's veto, it's good the discussion has started.
Should the Legislature override the veto, there are some basic fixes that could be implemented. The tax on prescription drugs is one.
If the override does not happen, we hope legislators and the governor will discuss tax cuts in the next session.