TAX OFFERS NO REFORMS FOR SCHOOLS

On April 9, the Missouri House of Representatives voted overwhelmingly to increase taxes, including corporate taxes, to raise an estimated $90 million to fund a revised school foundation formula. The tax increase amendment, sponsored by Rep. Steve Carroll, D-Hannibal, is a part of House Bill 1060 that was approved by a 106-45 count.

Associated Industries of Missouri and the Taxpayers Research Institute, a division of AIM, oppose HB 1060 because it offers no substantial reform in education. AIM/~TRIM supported Proposition B at the polls in November 1991 be~cause it co~ntained reform provisions and would have provided tax funding on a fair and proportionate basis. It appears as though House Bill 1060 is structured to appease voters in this election y~~ear.

Proponents of Carroll's tax increase amendment argued that corporate and business taxes are low in Missouri and, therefore, this increase is justified. This argument, of course, totally ignores the recent study by the Taxpayers Research Institute that revealed Missouri business is paying 34.5 percent of total state and local taxes. The total tax picture must be taken into consideration, not just a single tax.

Rep. Carroll's amendment to HB 1060 reimposed the graduated corporate tax rates, imposed originally in 1989, to fund refunds ordered by the courts to retired federal pensioners. Those rates expire with taxable years beginning Jan. 1, 1992. The amendment also provides a cap on the federal income taxes that taxpayers can deduct at $25,000 ($50,000 on combined returns) and increases the dependent exemption from $400 to $800. These changes would be effective for tax years beginning Jan. 1, 1993. This loss in federal deductibility would negatively impact many businesses across Missouri.

HB 1060 is intended to try to satisfy critics of the present school-aid financing scheme being challenged in court. Opponents of the measure, however, are not sure the revised bill will satisfy the challenge.

The bill, however, does assure all districts that they would not receive less state aid per student than they received in 1990-91. This is known as the "hold harmless" provision. The cost of this provision is estimated at $68 million for 1992-93.

Reprinted from "This Week: A Weekly Report of State Legislation Impacting Missouri Business and Industry."