Income tax

Governor Parson calls for special session for permanent $700 million income tax cut

(Jil Center Square) – The day after the nation celebrates Labor Day, the Missouri Legislature will convene in a special legislative session to work on cutting state income taxes.

Republican Gov. Mike Parson has called for the General Assembly to meet at noon on Tuesday, September 6, with a specific agenda: cut the income tax rate from 5.3% to 4.8% and expand farm tax credit programs.

“We can permanently reduce taxes for Missourians by more than $700 million,” Parson said today at a news conference. “And, again, this is permanent. The people of Missouri will see $700 million returned to them not just once, but every year.”

Missouri ended fiscal 2021 on June 30 with a surplus of $4.9 billion. Parson attributed the increase in general revenue to higher revenue and sales taxes.

Critics of the proposed tax cut believe federal COVID relief funds are increasing the surplus. They also draw parallels to Republican Kansas Gov. Sam Brownback’s 2012 income tax cuts that led to subsequent budget shortfalls.

“While Missouri is fortunate to have the fiscal reserves it currently has, this situation is temporary and a result of short-term federal funds,” said Traci Gleason, vice president of external affairs for the Missouri Budget Project. , in a press release. “Quite simply, relying on the current surplus to fund permanent tax changes is neither sustainable nor fiscally responsible, and will ultimately require cuts to public services as we saw in Kansas there. a few years.”

Parson said his plan has been scrutinized by lawmakers on both sides of the aisle and by “think tanks” of all persuasions.

“I’m telling you, we’ve done our homework on this,” said Parson, who said his administration spent nearly a year working on the proposal. “I think you have to…understand how important the income tax structure is and how dependent we are on it.”

In addition to reducing the tax rate, Parson’s plan increases the standard deduction for individuals by $2,000 and $4,000 for married joint filers.

“Combined, these tax reduction proposals would mean Missourians would earn their first $16,000 tax-free and $32,000 for married joint filers,” Parson said. “To put that into perspective, our plan would mean that a single mother with two children earning $35,000 would see an almost 21% decrease in state taxes paid.”

Parson said extending sunset clauses on farm tax credits from two to six years is equivalent to other programs.

“Eight times in the last session, the General Assembly has passed and I have signed similar incentive programs with six-year-old sunsets, including for large corporations in our cities and the state,” Parson said. “And if those programs are good enough for six years, so are the programs that support and grow the agricultural industry in Missouri. These agricultural programs cannot be implemented in two years, and still achieve success. that we all want. Missouri farm families deserve better, and at the very least, they deserve the same benefit as everyone else.”