JEFFERSON CITY, Mo. -- A sweeping overhaul on the taxes you pay in Missouri is moving through the Statehouse right now.
The plan would change a lot, but at its core, it would cut the income tax rate for businesses and most Missourians. Republican leadership, like Speaker of the House Todd Richardson (R-Poplar Bluff) really wants this to happen. "Our intent all along has been to work with our colleagues on the other end of the building, as well as our colleagues here in the House to come up with a broad-based tax reform bill that we could get all the way through the process."
The individual income tax rate for most people is now 5.9 percent. Missouri’s current corporate income tax rate is 6.25 percent. The bill, sponsored by Rep. Elijah Haahr (R-Springfield), would drop those both to 5 percent. There's also an earned-income tax credit for low-income workers.
But, all that means less money coming into the state. So, in his bill, Haahr is cutting back on some tax perks, including changing how some corporations calculate their taxable income. He says, that will help fund state projects, like improving roads, "Ours would provide about two billion dollars over the next ten years for roads, plus an additional 700 million that would go to counties."
The latest estimates do have the bill actually making the state hundreds of millions of dollars over the next five years, but democrats don't agree with those numbers. Rep. Gina Mitten (D-St. Louis) says, it could take Missouri down the same road as Kansas, which found itself with severe money problems, after big tax cuts, "They decided to just stop maintaining their state, and we saw their state fall apart. Our public education is in trouble. Our roads and bridges are in trouble. Our seniors are in trouble. What more trouble do we need to put Missourians in, just to win elections?"
Haahr's bill would phase out a federal income tax deduction for the rich. But, it would also eliminate a tax credit for low-income senior renters, and increase vehicle fees, which democrats say, would hurt the poor and working class.
The plan just passed the House of Representatives last week. It's now in the Senate. It faces a tough road there, as even Senate Republicans have raised concerns about what tax cuts could do to the state's finances. But Haahr said he’s still "optimistic.”