Income tax

Parson Urges Legislative Leaders to Cut Missouri Tax Rate | Policy

Governor Mike Parson delivers his State of the State address at the Missouri Capitol in Jefferson City on Wednesday, January 19, 2022.

David Carson, Post-Expedition

JEFFERSON CITY — Gov. Mike Parson began laying the groundwork for an attempt to cut Missouri’s tax rate on Tuesday.

In back-to-back meetings in his office with House and Senate leaders, the Republican discussed his decision earlier this month to call on lawmakers to return to Capitol Hill to lower the current tax rate to 4, 8%, compared to 5.4% currently.

Although the GOP-controlled chambers have backed previous tax cuts, Tuesday’s hour-long meetings did not result in a surefire endorsement of his plan.

‘Nothing is easy here,’ said Senate Majority Leader Caleb RowdenR-Columbia, who led the Senate through a contentious spring session.

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Calling for a special session, Parson said the state budget is currently teeming with excess revenue amid a post-pandemic economic surge that has pushed tax revenues up more than 14% over the past year. past year.

In addition to reducing the tax rate, Parson wants to increase the standard deduction to $16,000 for single filers and $32,000 for joint filers.

This would mean that a taxpayer earning $16,000 or less would owe no state income tax. A married couple with a non-working spouse earning $32,000 or less also owes no state income tax.

The current standard deduction for single filers is $12,950 and $25,900 for joint filers.

The proposed rate of 4.8% would put Missouri a few notches below Illinois, which has an income tax rate of 4.95%.

The governor announced his decision as part of an explanation of why he vetoed a tax refund plan approved by lawmakers in May. This $500 million proposal would have sent checks worth up to $500 to people earning up to $150,000.

Parson said low-income workers and seniors would have been excluded from the reimbursement plan. Also, since it was pro-rated, he said the $500 checks would likely have been closer to $100.

Sen. lincoln houghvice chairman of the Senate Appropriations Committee, said the General Assembly should approach tax cuts with caution.

“The books are pretty rosy right now, but where are we in two or three fiscal years,” Hough said after the meeting. “I’m happy to talk about tax cuts, happy to support tax cuts in a responsible way that doesn’t hamper the services the state provides to six and a half million people.

Rowden said he expects Parson to pressure lawmakers to cross the finish line.

“He’s got work to do, but it looks like he’s ready to get the job done,” Rowden said.

The left hanger is a calendar for the special session. Rowden said there was “not much clarity on the timeline”, but suggested nothing would happen until September, mainly because the House bedroom is undergoing major renovations.

“Given the nature of the House Chamber, I don’t think you can start until September,” Rowden said. “They haven’t settled on anything yet, so it’s still up in the air.”

Hough, who is contested in the GOP primary in his Springfield-area district, said the Legislature must pass the Aug. 2 election before the special session can begin.

“Nobody was a fan of doing that immediately,” Hough said.

In addition to the tax cut, Parson also wants lawmakers to return to rework a package of tax credits intended to help farmers.

Parson vetoed the plan, arguing that the proposal sent to him by lawmakers expires after two years, which is not long enough. He wants a six-year window to account for the long planning periods that farmers need.

The decision, which was expected, affects tax incentives for young farmers, meatpackers, charcoal producers, ethanol retailers and biodiesel manufacturers.

The various tax credits were worth about $40 million, according to a nonpartisan tax analysis.

Posted Tuesday, July 19 at noon.

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