Rep. Cierpiot- Gov. Nixon is playing politics with education dollars

In his weekly report, Rep. Mike Cierpiot, R-Lee's Summit, makes the case for overriding Gov. Jay Nixon's veto of HB 253.

I want to take this week’s Capitol Report to talk about the opportunity that is before the Missouri General Assembly, an opportunity to cut income taxes for the first time in nearly 90 years.  This regular session, we passed HB 253, which is a broad-based tax relief package, aimed at letting Missourians keep more of their hard earned dollars in their own pockets. 

Since the Legislature has adjourned, HB 253 has been vetoed by Governor Nixon.   Since then, he has been playing politics with education dollars and politicizing the issue, spreading false misinformation and misdirections.    So please allow me to set the record straight and layout exactly what is in HB 253, and how it will benefit all Missourians.
 

Income Tax

• ​Beginning in 2013, the maximum tax on person income will be reduced by .5% over 10 years.  This reduction only occurs if the tax revenues for the state are up more than $100 million.  In other words, this provision of the bill doesn’t go into effect unless state revenues go up.  If our economy goes stagnate, then the portion of the bill does not go into effect.  This is a safeguard to taxpayers to assure that essential services are maintained and doesn't diminish. 

• Taxpayers will be allowed to deduct  10% of business income for 2014 and up to 50% once the program is fully phased in by 2017.

• Starting with 2014, the tax rate on corporate income will be reduced by 3% over the next 10 years.  This reduction only occurs if the state tax revenues for the state are up more than $100 million.

Tax Amnesty

• This allows any taxpayer with unpaid taxes prior to 2012 to apply for amnesty and pay all their taxes in full without paying a penalty.

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Streamlined Sales Tax 

• This is a multistate agreement to simplify the collection of sales taxes for e-commerce transactions.  However, this portion of the bill requires the Congress to enact.  If Congress doesn’t act, this portion of the bill will go unused.

Use Tax Nexus

• This changes the law regarding the collection of sales and use taxes relating to nexus with Missouri.

The fiscal impact of HB 253 could be substantial in the long run.  Using only the number provided by Governor Nixon’s own budget office, here is the breakdown of the fiscal impact:

• Nexus = +$7 million
• Tax Amnesty = +$51.8 million
• Corporate income tax rate = -$5 million
• Individual income tax deduction = -$20.7 million
• Business tax income 50% exclusion = -$18.2 million

So using the Governors numbers we will actually have an additional $14.9 million dollars for FY14.  Using those same numbers, assuming there is no growth and business development, the state would be down $101.5 million for FY15.  Seeing how that number is much lower than the $100 million dollar trigger, the tax cut would not go into effect.
 
Governor Nixon is playing politics with education dollars in hopes that we don’t override him on HB 253.  His withhold of $400 million is punishing schools, agriculture, and state employees to score a political victory.    We have increased K-12 dollars $300 million since 2008, and education funding would not be harmed with the Legislature overriding HB253.

This fiscal year, the state of Missouri will be up nearly $742 million dollars more than we had in FY 2012, almost a 10.11% increase.   I don’t think that it’s absurd to give a small portion of that increase back to the citizens of this state who funded that increase.  I plan to stand with my original vote in the House and Vote to override Governor Nixon.