Governor candidate calls for tax review

Missouri needs a comprehensive review of state tax laws, including all exemptions and credits, State Treasurer Sarah Steelman said during a campaign stop Wednesday in Cape Girardeau.

Steelman, who is seeking the GOP nomination for governor, said one of her first acts if elected would be to create an 11-member commission, including two Federal Reserve bank economists, to study the tax code and order them to report findings and recommendations within 100 days.

But while waiting for the report, she said she would urge lawmakers to increase the dependent deductions and personal exemptions allowed on Missouri income taxes, saving taxpayers about $200 million.

While lawmakers have tinkered with the size of income tax exemptions and deductions over the years, the basic structure of Missouri income taxes has not changed for decades. The top tax rate is 6 percent for taxable incomes above $9,000, and the tax code is linked to the federal income tax, which means federal changes that add or eliminate deductions have a direct effect on Missouri revenue by decreasing or increasing the amount of taxable income each person reports.

Steelman wants to increase the personal exemption, a deduction each taxpayer receives, from $2,100 to $2,625 for single filers and from $4,200 to $5,250 for married couples. The change would save a single person paying the highest tax rate of 6 percent just over $31 a year.

She also called for an increase in the dependent deduction to $2,100 from $1,200. That change would save each taxpayer up to $54 per year for each dependent.

Neither the personal exemption nor the dependent deduction have been increased since 1999, Steelman said. The changes she is recommending would reflect inflation since that time, she said.

"We can stimulate the economy by returning money to the people," she said.

Steelman was elected state treasurer in 2004 after six years in the state Senate. She faces U.S. Rep. Kenny Hulshof of Columbia and two lesser-known candidates for the chance to replace Gov. Matt Blunt. The primary winner will likely face Attorney General Jay Nixon in the November election.

Steelman's proposal for an 11-member Missouri Tax Code Review Commission would give the group unlimited latitude to explore all aspects of the tax code, she said.

"Everything should be on the table, every tax and every tax credit," Steelman said. "All those things need to be looked at."

Steelman, when asked, would not name any exemption or tax credit she feels is unnecessary. While some are probably "some pet project some legislator put in 10 years ago," others are probably justified, she said.

Lawmakers have passed several tax cuts, exemptions and credits in recent years. They have passed bills phasing out the taxation of Social Security benefits and pensions, created a tax credit program for employers that create jobs with high wages and health insurance benefits and approved a bill giving large tax credits to a single developer for buying land in depressed areas of St. Louis.

This year, lawmakers have sent Blunt a bill providing $240 million in tax credits that would be used to lure an airplane manufacturer to Kansas City. Asked about the latest tax credit bill, Steelman did not criticize it but noted that her proposals "costs less than that and this offers broad-based tax relief."

The tax review panel would be expected to do its work without regards to politics, she said. "It really needs to be an objective analysis."

rkeller@semissourian.com

335-6611, extension 126

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