House committee considers lowering corporate tax rate

Business Today

JEFFERSON CITY, Mo. - Reducing the corporate income tax rate - one of the few legislative priorities of Missouri's Democratic governor to be embraced by Republican lawmakers - was considered by a House committee last week.

The bill would lower the corporate income tax rate by one percentage point from 6.25 percent to 5.25 percent starting July 1.

The rate reduction would cost the state an estimated $18 million a year in lost revenue. The sponsor, state Rep. Shannon Cooper, R-Clinton, said he was happy to support Gov. Bob Holden on this issue.

"I guarantee these corporations will turn that $18 million into new jobs," Cooper said.

Cooper chairs the House Tax Policy Committee, which held the hearing.

Holden first called for the corporate tax cut during his State of the State address in January. He urged the General Assembly to immediately act on the proposal during a summit on job creation he recently sponsored.

"This across-the-board reduction will reduce the tax burden on all corporations and provide an incentive for all Missouri businesses to invest, spurring greater economic activity," Holden said.

The bill's many co-sponsors, all Republicans, include House Majority Floor Leader Jason Crowell of Cape Girardeau and state Rep. Rob Mayer of Dexter.

Pro-business groups such as Associated Industries of Missouri, the state Chamber of Commerce and the National Federation of Independent Businesses testified in favor of the measure, saying it would both attract and retain jobs in the state.

"Businesses need an incentive to stay in Missouri rather than crossing our borders," said David Smith, a lobbyist for Associated Industries.

No one spoke in opposition.

The corporate income tax rate was last adjusted in 1993 as part of the Outstanding Schools Act, which raised taxes to benefit education. The tax increased from 5 percent to its present level of 6.25 percent that year.

Corporate income taxes, which have declined steadily in recent years, are expected to generate $317 million during the fiscal year that begins July 1. That amount represents 4.1 percent of the state's general revenue budget.

In exchange for reducing the tax rate for all Missouri corporations, Holden wants the legislature to consider closing various loopholes some out-of-state companies use to avoid paying Missouri taxes. A bill to do that was filed in the Senate last week.

The bill is HB 421.