On June 5th the Governor vetoed HB 253, which was to be the first income tax cut Missourians have seen in almost a century. With each passing week he has created a new excuse to deny Missouri families and businesses a chance to keep more of their hard-earned tax dollars, and the sad truth is that his arguments have been political theater at its finest with almost no basis in reality. To set the record straight and counter some of the misinformation the governor has attempted to spread, I want to out the facts and give you the beneficial and accurate reasons for overriding the Governor’s veto of HB 253.
To begin with, the truth is that the bill allows for a personal income tax cut that will reduce the tax rate by 0.5 percent over a period of ten years, which would bring our top income tax bracket down to 5.5 percent from the current rate of 6 percent. Keep in mind, these cuts will only take place if the state has collected at least $100 million more in tax revenue in a given year compared to one of the three years previous. If the Federal government passes a piece of legislation called the Marketplace Fairness Act, or something similar, then the personal tax rate would be reduced by another 0.5 percent. The Marketplace Fairness Act is a piece of legislation in Congress that would mandate the collection of sales tax by all online or catalog retailers. Another tax decrease in HB 253 for individual tax payers is the 10 percent tax deduction for business income in the first year of implementation, which will eventually lead to a 50 percent deduction when it is fully phased-in after the 2017 tax year.
The final tax cut in HB 253 is reduction in rates for corporate income tax by 3 percent over a ten year period. Once again the yearly cuts would only occur if the state collected at least $100 million more in revenue than any of the previous three years. When fully phased-in, the corporate income tax rate would be 3.25 percent.
On top of everything, HB 253 increases the personal exemption for individual income tax to $3,100 for anyone having an adjusted gross income of less than $20,000.
What do all these tax cuts mean to Missourians in dollars and cents? If HB 253 is fully implemented, taxpayers will see approximately $700 million in tax savings each year. That is a huge amount of money, and that is also the reason we put a safeguard in place. For the tax cuts in this bill to fully go into effect, state revenues would have to increase by one billion dollars.
My colleagues and I believe you know how to spend your money better than we do. With more of these dollars back in your hands, we believe Missourians will spend more and our local businesses will have a renewed desire to grow and expand. On top of all this, Missouri will become more competitive with our neighboring states such as Kansas and Oklahoma, who have already taken similar steps with their tax systems.
I hope that with all these positive facts about HB 253 on the table, you will understand why I have been fighting so hard to override the Governor’s veto. When you elected a conservative super majority to the House of Representatives less than eight months ago, you asked for lower taxes and less spending. HB 253 does just that, in a safe and responsible fashion.