Mo. House members say Kansans should pay lower taxes

JEFFERSON CITY, Mo. (AP) -- Missouri House members acted Tuesday to forestall a flare up in an ongoing rivalry with Kansas by passing a bill that would lower taxes for many residents who work in Missouri but live elsewhere.

The measure, which was approved 145-0, now goes to the Senate. The bill would allow those who live in another state but work in Missouri to subtract what they pay in property taxes in their home state from the income on which they are taxed in Missouri. It applies only if the other state allows Missourians to do the same.

Last year, Missouri lawmakers repealed the nonresident tax deduction as part of a larger bill that cut state taxes on some retirement benefits. That move prompted threats from Kansas lawmakers to raise taxes on Missourians who work across state lines.

A bill doing that has already cleared the Kansas House, but Missouri lawmakers said if they pass their legislation, they have been promised that the retaliatory bill won't clear the Kansas Senate.

If Missouri's nonresident tax break is reinstated, most of the benefit likely would go to the state of Kansas instead of directly to residents. That's because most Kansas residents who would have had to pay higher income taxes in Missouri would -- as a result -- have paid less in Kansas.

Minority Leader Paul LeVota, who handled the Missouri legislation, said it's important for the two states to work together to improve the entire region.

"We can fight on the basketball court and football field, but when it comes to economic activity and taxes, we need to work together," said LeVota, D-Independence.

The rivalry between Missouri and Kansas dates to the Civil War. Since then, the University of Kansas and the University of Missouri-Columbia have been athletic rivals.

Most of Missouri's neighbors let residents who cross their borders for jobs deduct Missouri property taxes from that state's income taxes. Arkansas, Iowa, Kansas, Kentucky and Oklahoma allow the deductions. Illinois and Nebraska do not. Tennessee has no state income tax.

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Tax break is HB1661.

On the Net:

Legislature: http://www.moga.mo.gov