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Dugger Report 4.23.2014

This is not the time for political fun and games. This is the time for a new beginning. I ask you now to put aside any feelings of frustration or helplessness about our political institutions and join me in this dramatic but responsible plan to reduce the enormous burden of taxation on you and your family.
—Ronald Reagan
This week the Missouri House gave final approval to legislation that would reduce the state income tax for the first time in nearly a century. When fully phased in the bill would reduce the tax burden for Missouri families and businesses by more than $600 million each year.
Senate Bills 509 & 496 is similar to a tax cut plan approved by the legislature last year.  Unfortunately, that bill was vetoed by the governor.  Sadly, in his arguments, the governor pitted those who valued tax reform against public education; claiming that you could be for only one but not both. Ultimately, the override of last year’s tax-cut bill was unsuccessful.
This year’s version seeks to address the governor’s concerns outlined in last year’s veto letter  by calling for a smaller cut with more safeguards. For instance, last year’s bill would have allowed a 50 percent income tax deduction for business income while this year’s version implements only a 25 percent deduction. In addition, the version approved by the House this year would require revenues to increase by at least $150 million in a given year before each phase of the cut would be implemented.  Last year’s bill required revenues to increase by only $100 million or more.
The plan would cut the top income tax rate from 6 percent to 5.5 percent over a period of years depending on increases to general revenue. It also would phase in the 25 percent tax exemption for Missouri business income in 5 percent increments. For low income Missourians who make $20,000 or less, the bill would increase the exemption for personal income taxes from $2,100 to $2,600. In addition, the bill would require that the brackets for individual income tax be adjusted annually for the percent increase in inflation. If the bill becomes law, the tax cuts would begin being implemented in 2017.
SBs 509 & 496, which is now on the governor’s desk, provides a responsible, well-reasoned approach to reducing the tax burden for more than 2 million Missouri families and individuals.  Moreover, by requiring revenues to rise in order to trigger the next phase of cuts we ensure that there will be no negative impact to education funding. Most importantly, this much needed tax cut will drive revenues up as more businesses come to Missouri and existing businesses use the dollars they are allowed to keep to grow and expand.
While the legislature has given the tax cut plan final approval it seems likely that the debate on this issue will continue the next few weeks as the governor decides whether to sign or veto the bill. Early indications are that he will veto the legislation, which will then give the General Assembly the opportunity to override the veto. We shall see.
For more information about the legislation mentioned above please visit the House of Representatives website, www.house.mo.gov. As always, it is an honor to serve you in the Missouri House of Representatives.

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