The big news this week was the veto override of the tax cut bill with lots of drama.
One lone House Democrat, Rep. Keith English (D-Florissant) crossed over to be the final deciding vote for the required two-thirds majority to override Gov. Jay Nixon’s veto ofSB509. All 108 House Republicans voted yes and 46 House Democrats voted no (all but one). The Senate voted Monday 23-8 along partyline votes to override.
Speaker Tim Jones left the vote board conspicuously open for some time while Rep. English was summoned from a collegue's locked office and was escorted into the chamber by Rep. Ron Hicks (R-St. Peters). After the final vote was cast, the House Republicans broke decorum, stood and cheered.
It was not a victory for Missouri.
The income tax legislation which becomes law on August 28, 2014 will reduce state revenue collections by an estimated $620 million to $800 million a year once fully phased in. Coincidentally, $620 million is roughly the amount by which the statutory formula for distributing state funding to local public school districts is underfunded for the current school year.
And because of a drafting error, the bill could end up costing the state $4.8 billion a year, wiping out nearly two-thirds of state general revenue.
With two-thirds of state general revenue collections suddenly gone, the state not only wouldn’t have sufficient money to fund public education, it wouldn’t have sufficient money to fund anything. Not only will K-12 education never be fully funded, but it will instead face steep cuts, as will spending on higher education.
SB 509 will provide a 25 percent tax deduction for “pass through” business income reported on personal income tax returns. It also will gradually cut the top individual income tax rate from 6 percent to 5.5 percent, subject to minimal annual revenue growth.
SB 509 would provide huge tax breaks for lawyers and lobbyists, but save the average Missouri working family only about $32 a year, roughly the price of an oil change. SB 509 encourages tax avoidance since those select taxpayers who are able to do so will restructure their corporate status to take advantage of the deduction. Such creative accounting will do nothing to create jobs.
SB 509 is inherently unfair in that it treats some taxpayers better than others, even if they make the same amount of money. Under this bill, the owner of a pass-through business reporting $40,000 in adjusted gross income would pay state income taxes of $704. However, an employee reporting $40,000 in adjusted gross income would pay $1,123 in income tax – 57 percent more than the business owner. Taxpayers reporting more than $100,000 a year in taxable income make up just 7 percent of all Missouri tax returns filed. However, this small group would receive 52 percent of the total tax savings under the bill.
Tuesday was a very sad day for Missouri's public schools and universities.
2 comments:
I hope the lone dem. feels really good about himself, because he shouldn't. Everyone that voted for this bill should be kicked out of office, how on earth is this good for Missouri??
This isn't good for Missouri. This is good for the wealthy that do not rely on public education. This is good for the groups hoping that public education fails so that for-profit institutions can be established in its place. As an individual, you should ask yourself whether saving $30 a year is worth the fallout that will occur by the drastic education cuts. I do not want my child in a classroom with 50 other kids because the district can't hire teachers to replace those leaving. I don't want Missouri schools to pay their teachers far less than neighboring states, driving the best teachers from our schools. I do not want to see programs cut from local colleges and universities or grant money and scholarships removed. I don't want to see my child's opportunities ruined so that the top 7 percent can reap the majority of the tax cut benefits. Thinking about these politicians standing and applauding the passage of this bill makes my stomach turn.
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