Gov. Parson calls for income tax cut

COLUMBIA, Mo. — Republican Gov. Mike Parson on Friday vetoed a one-time, limited tax refund and instead called on state lawmakers to pass a widespread income tax cut.

Parson proposed a special legislative session focused on cutting Missouri's individual income tax rate, which is 5.4% for most taxpayers, to around 4.7%.

Missouri has surplus revenue, in part because of repeated federal stimulus funding during the COVID-19 pandemic. Parson wants to use some of that extra funding for tax breaks, although he didn't provide details on what the cost might be.

"Now is the time to give back to hardworking Missourians," Parson said.

He pitched increasing the standard deduction allowance and paring down the number of tax brackets. The governor also recommended cutting income taxes entirely for individuals who make $16,000 or less in a year or for couples filing jointly who make less than $32,000.

Parson has not decided when to call lawmakers back to the Capitol for a special session to work on tax changes, but said he wants tax cuts to kick in by Jan. 1.

He has support from at least one key legislative leader.

"In the face of historic inflation caused by reckless federal spending, I look forward to working with my colleagues and Gov. Parson to develop a plan to provide additional relief to Missouri families and job creators," Republican Senate President Pro Tem Dave Schatz said in a statement.

Parson proposed cutting income taxes as an alternative to lawmakers' planned one-time tax refund, which he vetoed Friday.

Under the bill passed by lawmakers, taxpayers would have gotten a one-time tax credit of up to $500 for individuals and $1,000 for couples. The refunds would have gone only to individuals earning less than $150,000 and couples making less than $300,000 annually.

In practice, people would have received a $1 refund for each $1 of tax owed until their tax bill reached the refund limit of $500.

Democratic lawmakers had argued the tax refund would only benefit middle-income families because the poorest workers don't pay income taxes and that not enough money was set aside to provide the full $500 or $1,000 for everyone who qualified.

Parson echoed similar concerns when announcing his veto Friday at the Capitol, telling reporters "no one was ever going to receive direct checks for $500 or $1,000" under that bill.

"Due to the temporary program being underfunded, some Missourians would have received somewhere between $100 to $200, while many would have received nothing," he said. "Hardworking Missourians -- including low earners, high earners and vulnerable populations -- would have seen little to no relief."

Republican Sen. Lincoln Hough, who sponsored a different tax refund proposal, called Parson's decision to veto the bill "frustrating and disappointing." But he said he'll work with Parson and lawmakers to pass a tax cut.