Missouri House pitches using budget surplus for tax breaks

COLUMBIA, Mo. — The Republican Missouri House budget leader on Wednesday proposed an idea to use some of a more than $3 billion budget surplus to give out widespread income tax credits.

House Budget Committee Chairman Cody Smith's late-session proposal is aimed at doling out tax credits worth what workers owe in state income taxes.

Smith's initial plan would set aside $1 billion for the tax credits and would cap the tax credits at up to $500 for individuals or $1,000 for married couples filing jointly.

In practice, if an individual owes $1 in state income taxes, they would be repaid $1. If an individual owes $600 in income taxes, they would be reimbursed $500.

"These are working Missourians who have paid state income tax, of which we have an abundance, and to me the right thing to do in that scenario is to return it to them, especially in times of inflation and increased prices," Smith said during a Wednesday committee hearing on his legislation.

The Missouri House speaker and other top House Republicans have said passing the tax break will be a main priority as lawmakers face a tight mid-May deadline to finalize legislation.

But Department of Revenue officials on Wednesday pointed out practical issues in implementing Smith's plan, including not knowing whether $1 billion would cover the maximum $500 or $1,000 credits for all those who qualify as well as not knowing how many people wouldn't be eligible for the tax break.

House Democrats have criticized the measure as a tax break that wouldn't help the state's poorest or seniors who no longer pay income taxes.

"We are not addressing low- or moderate-income Missourians that do not have a tax liability," Kansas City Democratic Rep. Maggie Nurrenbern said.

House Democrats had proposed setting aside $100 million to give $1,000 checks to poor families who have struggled with housing or food insecurity. The Republican-led House voted that measure down.

Republican Sen. Lincoln Hough proposed a similar tax break that would automatically apply a $500 tax credit to individuals' tax liability. That measure has not passed out of committee for debate by the full Senate.

Senate researchers estimated as many as 3.3 million taxpayers would be eligible for tax credits under Hough's bill, with a price tag of at least $1.7 billion.