JEFFERSON CITY, Mo. — Lawmakers are back at the Missouri State Capitol to cut the state’s income tax and extend tax credits for farmers but the first day showed there’s no plan in place on moving forward.
With a surplus of money in the bank, the governor wants to give Missouri taxpayers some relief. Last month, a group of senators disbanded in hopes of attaining peace among Republicans, but tensions still remain high in the Senate.
The General Assembly gathered for both the start of the annual veto session and a special session Wednesday. The governor called the special session to lower the state’s income tax rate from 5.3% to 4.8%.
Parson’s plan would reduce the individual income tax rate from 5.3% to 4.8%, increase the standard deduction by $2,000 and $4,000 for single and joint filers, and simplify the state tax code by eliminating the bottom tax bracket.
According to the proposal, every Missourian would not be taxed on their first $16,000 in earnings. Married joint filers would not be taxed on their first $32,000 in earnings. The changes to the tax code and rate would cost the state an estimated $700 million.
“This is not the government’s money, this is not President Biden’s money, it’s not the state of Missouri’s money, it’s the people’s money,” said Sen. Bob Onder, R-Lake St. Louis.
Parson has previously said that for a married couple making $125,000 annually, they would see an 11% reduction in their tax liability. He also wants to eliminate the bottom tax bracket.
This comes after the governor rejected a tax rebate plan, Parson said he didn’t like that not everyone in the state would benefit. He vetoed a plan that would have given some Missourians a $500 non-refundable tax credit based on last year’s filing. It was estimated to cost the state up to $500 million.
When Missouri started the new fiscal year, it posted a record surplus of $4.9 billion. Income taxes are a big contributor to the state’s general revenue. While the cut will cost the state $700 million, Parson said the package doesn’t take away from one group or department.
Over in the House, members gaveled in and out for both veto and special session. The chamber full of folding tables and chairs while renovations have been put on hold. It’s the first major project since the 1980s. The upgrades include new voting boards, carpets, and wiring. The goal was to have it completed by the middle of September but with a delay in shipping and a special session, members will have to make do. Benches, desks, and furniture line the hallways outside of the lower chamber. The project was supposed to be done by veto session which takes place on September 14 but due to shipping delays for the carpet, the project is now on hold. Across the Capitol in the upper chamber.
“And shame on us,” Onder said. “There are other important issues, those issues, have been before us for some time.
Senate aired grievances Wednesday following a dysfunctional regular session. Last month a handful of GOP senators released a letter saying it’s time for the Conservative Caucus group to “disband.”
Some called the Missouri Senate broken during this past legislative session. By the middle of the session, the three factions were easy to spot: Democrats, Republicans, and the Conservative Caucus.
Sen. Bill Eigel, R-Weldon Spring, along with four other Republican senators, Sen. Mike Moon (R-Ash Grove), Sen. Denny Hoskins (R-Warrensburg), Sen. Andrew Koenig (R-Manchester), and Sen. Rick Brattin (R-Harrisonville), released a letter Monday saying it’s time for the Conservative Caucus group to disband.
According to the letter, the caucus was formed back in 2018 and since then, “the statistics on voting records bear a striking contrast between Conservative Caucus-aligned Senators and colleague Republican members.”
Nearly two dozen bills were filed Wednesday during special session but only half of them dealt with tax cuts. The others were outside of the governor’s call of tax credits and cuts.
“This bill is to ban the teaching of critical race theory,” Hoskins said while sending his legislation forward. “This is a bill I filed this past legislative session; I also filed it in special session in the summer of 2021.”
Senate Minority Leader John Rizzo, D-Independence, said the infighting among Republicans hasn’t gone away.
“It doesn’t seem like the Kumbaya was as long lasting as maybe some people thought,” Rizzo said. “I don’t think it’s smooth sailing right now and we will see what happens next week when we get back.”
Rizzo is one of the senators who filed a tax cut bill Wednesday. He said his legislation is an earned tax credit.
“An earned income tax credit is a tax cut for working families and is designed to reward work and push people into the labor world,” Rizzo said. “The point is to encourage people to get into the workforce and reward those, especially the working poor.”
Sen. Lincoln Hough (R-Springfield), the vice chair of the Senate Appropriations Committee also filed legislation. His plan would offer immediate rebates and tax cuts in the future based on the state’s revenue growth. Hough’s bill would send $325 debates to individuals making less than $150,000 and couples making less than $300,00 would receive $650 checks.
Moon filed a bill that would reduce the state’s corporate income tax rate which is currently 4%. A similar plan was filed by Hoskins, who would eliminate the tax altogether. Two floors below the chambers Wednesday, in the rotunda, nearly a hundred people with Americans for Prosperity Missouri rallied to ask for an even lower tax cut and do away with tax credits.
“Our first ask is to separate them out,” president of the Missouri chapter Jeremy Cady said. “Our second ask is a real tax cut, our third is to oppose tax credits and the fourth ask is to do it in a civil and respectful manner.”
Another part of the game plan is to help one of Missouri’s largest industries: agriculture. The Show Me State is home to 95,000 farms, ranking second in the nation, and third for beef cows.
Part of the call for a special session is to reauthorize tax credits for farmers. Under the legislation passed by lawmakers this year, the tax credits expire in two years. The governor said that’s not enough time to get new projects started using the credits. Parson is asking for a six-year sunset provision.
Parson said there were too many special interests, lobbyists, and people involved who shouldn’t be involved in the legislation passed in the spring. The governor, a farmer himself, said earlier this year to fill up three tractors on the same day cost him $500.
Parson’s plan calls for the creation of tax credit programs for retailers of higher ethanol blend fuels and biodiesel, in-state biodiesel producers, establishing or improving urban farm operations, and creating the Specialty Agricultural Crops Act. Tax credits would be extended for meat processing facility improvements, transportation of agricultural goods, and an exemption for certain vehicles from state and local sales and use taxes.
The creation or extension of the aforementioned agriculture programs would last six years, according to the governor. Most of the work will happen next week when committee hearings are held inside the Capitol. Senators will return for session Thursday.