Local businesses support tax-cut bill override

House Bill 253 has caused controversy among the Missouri Legislature, chambers of commerce, school districts and communities. One place where there doesn't seem to be controversy surrounding the bill is among businesses that will benefit from a tax decrease and maybe have a shot at growth over struggle.

House Bill 253 would phase in a 50 percent tax deduction for business income over the next five years, along with reducing the income tax rate by 0.5 percent for individuals and 3 percent for corporations over the next 10 years. For the individual and corporate tax cuts to go into effect, state tax revenue would have to rise by $100 million annually.

The income tax rate for corporations is 6.25 percent. If the rate is dropped 3 percent as House Bill 253 would do if the veto is overridden, the current rate would be cut almost in half to 3.25 percent.

Small-business owners add their business' income to their personal income when they file their taxes.

The bill was passed by the Missouri Legislature, and it was vetoed by Gov. Jay Nixon, who has said the tax cuts could hurt funding for state programs. Nixon called the bill's $800 million price tag "a fiscally irresponsible experiment that would undermine the state's economic and fiscal health and jeopardize funding for education and vital public services."

The veto override session begins Wednesday.

Supporters of the bill hope the advantages for businesses will make their way down to consumers' pockets and stimulate the state's economy in more ways than one.

House Bill 253 would cut income tax for small businesses, or those who earn business income, by 10 percent each year for the next five years. For some local businesses, a tax break could mean the expansion of their business, hiring more employees or buying needed equipment. Supporters say it also could help keep businesses in Missouri from moving to surrounding states that have lower or no income tax for businesses. The bill's passing also could bring more business into the state.

Holley Hosick, owner of Eden Spa & Salon in Cape Girardeau, said of all her employees, she is the last one to receive a paycheck. She hopes the bill passes not only for her business' and customers' sake, but also for her employees. Hosick never taps into business income until her business' needs are met, she said.

"My staff and what they need to do to do what they have to do is always top priority," she said.

Hosick's business is considered a limited liability corporation of which she is the only member, she said. Eden Spa & Salon's income is considered personal income, she said, and her business is used like a savings account.

Hosick said a tax break would allow her business to grow at a faster rate, and it would allow her to give several employees raises.

"For me, a tax break would be huge," she said. "It wouldn't be money in my pocket, it would be money back in my business."

State Rep. Kathy Swan, R-Cape Girardeau, owns JCS/Tel-Link in Cape Girardeau. The business is classified as a corporation, she said, and would be eligible for a 3 percent decrease in income tax rate over 10 years, which would be phased in yearly if state tax revenue rises by $100 million each year. If state tax revenue does not rise by $100 million, the tax rate would not be decreased further until the next year as long as the "trigger" is met.

Swan said the tax reduction simply is 3 percent more money in the pockets of businesses, which would help the job market and help spur the economy.

"With the tax cut phase-in, it allows us to expand or create new jobs," she said, and would sway employers to hire more people, instead of combining duties given to one employee, for example.

Because the $100 million trigger does not apply to the 50 percent income tax cut for smaller businesses, the bill would be a considerable help to them, Swan said.

"So many small businesses truly are the lifeblood of our communities," she said.

Consumer confidence is key in bettering the job market and economy, and any money saved for Missouri businesses is a help, Swan said.

"More money in our pockets means more spending power and means more confidence in business itself," she said.

Patrick Abbott, owner of Cup 'n' Cork in Cape Girardeau, also would be eligible for a 50 percent tax decrease over five years.

Abbott said if his tax burden were eased, improvements and expansion would be a realistic possibility for his business. At that point, he said customers could be subject to trickle-down effects, as he could expand his dining room, allowing more room for customers, and he could purchase a more modern cash register, speeding up the process of helping guests.

But he's admittedly uneducated about the bill.

"If business owners don't know about it, it's hard for us to take a side," he said.

Tracy King, vice president of governmental affairs for the Missouri Chamber of Commerce and Industry, said most Missouri business owners are not well-informed on House Bill 253, and they need to be because they are what creates jobs -- not larger businesses and corporations.

King said in order for Missouri business to stay competitive with states such as Oklahoma and Kansas, which have implemented similar tax rate reductions, the state must pass House Bill 253.

"Income tax is the new border war," she said. "We've got to remain competitive, and if we don't, we're going to lose this border war."

The Cape County Republican Women hosted a discussion on House Bill 253 on Friday at Dexter Bar-B-Que in Cape Girardeau, featuring Rep. Shelley Keeney, Missouri State House Majority Caucus chairwoman.

Keeney said she was not optimistic of a veto override of House Bill 253 during the session that begins at noon Wednesday, saying some who voted in favor of the bill the first time will not vote for a veto override.

Not all business groups are in favor of the legislation, including some chambers of commerce in Missouri.

Columbia's chamber of commerce announced its stance against the override of Gov. Jay Nixon's veto of HB 253 in late August, citing the tax cuts' effect on education funding. The chamber joined Springfield's group, the Civic Council of Greater Kansas City and the University of Missouri in its opposition of an override.

adowning@semissourian.com

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Pertinent addresses:

151 S. Spanish St., Cape Girardeau, Mo.

46 N. Main St., Cape Girardeau, Mo.

1606 N. Kingshighway, Cape Girardeau, Mo.

Jefferson City, Mo.