Income tax

Governor aims for permanent income tax cut, rather than one-time refund, in Missouri legislative special session

JEFFERSON CITY, Mo. — With 40-year high inflation continually forcing citizens to spend more on everyday items, lawmakers and political leaders are gearing up for a special session to give Missourians tax relief.

The Missouri House passed a $1 billion tax refund measure during this year’s legislative session to hopefully ease some of the financial burden of rising costs. However, after debate in the Senate the refund was reduced to around $500 million, Governor Mike Parson vetoed the bill and then hinted at an upcoming special session focused on lowering taxes on the revenue.

“I have always advocated for lower taxes for Missourians and I support the spirit of this legislation,” Parson said in a statement. Press release announcing his veto. “However, the reality is that we can do better for all Missouri taxpayers than HB 2090, and I want to focus on a comprehensive and permanent tax reform package.”

There is currently a law that reduces Missouri income tax by 0.1% each time a certain state revenue threshold is reached. But, those familiar with the special session told The Heartlander Parson he wants to speed up that process, instead of having to wait to reach milestones to provide relief to Missourians.

“We are planning a special session to pass the LARGEST state income TAX CUT in Missouri history, which will provide permanent tax relief to Missourians,” Parson said in an Aug. 8 post on social networks. “As the country and Missouri face record inflation, historically high gas prices and rising food prices, we want to provide permanent tax relief that helps Missourians save money every year. …and not a temporary stimulant.”

State Representative Cody Smith, the sponsor of the vetoed tax refund measure, fought hard to get the legislation to the governor’s office, but seemed equally zealous to work with Parson in the special session to deliver an income tax cut for Missourians.

“At a time when our state has more money than ever before, I will do everything in my power to put that money back in the taxpayer’s pocket, and I look forward to working with the governor to do so.” , Smith said in a statement. after Parson’s veto.

For the second year in a row, Missouri would have set a record for the most money available in its history in July 2022, posting a budget surplus of $4.9 billion.

Jeremy Cady, director of Americans for Prosperity-Missouri — who backed the initial refund measure that Parson vetoed — agrees with the governor that an income tax cut would benefit better to the people of Missouri.

“It would be better for Missouri as a whole to do more of a permanent tax cut to reduce income tax,” Cady told the Heartlander on Tuesday. “Population-wise, we’ve been pretty stagnant for 20, 30, 40 years now overall. If we really want to drive growth in the state, we really need to consider bigger reforms like lowering taxes. »

Cady pointed out that states with no income tax — including Florida, Tennessee and Texas — are booming with growth right now. An unprecedented number of citizens have been reported from California – the state with the highest income tax at 13.3%, according to TurboTax – in Texas, a state that does not have such a tax burden.

“I think in the future, at some point, Missouri will really have to look at how we can achieve 0% income tax and be competitive with other states in the country,” he noted.

There’s speculation about how much — or how little — Parson is aiming to cut Missouri’s sales tax, but multiple sources familiar with the matter believe it will end up around 4.8%, down from 5.3%. currently. No date has yet been announced for the special session.

“Now is the time to take additional steps to help ease the pressure on Missouri families,” Parson said. “Permanent tax cuts that bring real relief to families, seniors, the working class and small businesses every year are a better answer to the inflationary pressure we face, and we look forward to it. .”