KANSAS CITY, Mo. – Gov. Mike Parson is traveling around Missouri to talk to local leaders and the public about his plan to cut taxes during a special session that starts in two weeks.
Two of his first stops were in St. Joseph and Kansas City Tuesday afternoon. Parson told a room full of people at Union Station in Kansas City that by January, Missourians will see an increase in their paychecks. He said his plan is to use the state’s surplus of money to lower the state’s income tax.
The 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.
“We’ve never had an opportunity to give this much money back, this large of a tax cut in the state’s history,” Parson said. “Our state income tax has almost grown by 40% since last year.”
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.
“Every tax-paying Missourian, no matter their background, income, or job description will see a reduction in their tax liability,” Parson said Monday. “This isn’t just something we put together in a week or two, this has been about a year-long project for us trying to figure this out and to see how we are going to do it.”
Parson 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.
“If you’re a senior and you’re still in the workforce and you make less than $20,000, you will not have a tax obligation to the state,” Parson said.
This comes after the governor rejected a tax rebate plan passed earlier this year by lawmakers. He 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.
“You’ve already got people out there saying you know we laid off 500 employees to do this, which is totally false, that we’re not going to fully fund education which is totally false,” Parson said. “That’s why I’m out here making sure people understand.”
The governor also made it clear Tuesday, that the cut has nothing to do with federal funds.
“We’re still going to have money left to do expansions, to keep doing all the things we are doing now,” Parson said. “We will also have enough money left to go on the bottom line. This has nothing whatsoever to do with federal funds, absolutely nothing.”
Parson met with House Democrats Tuesday before traveling to Kansas City. House Minority Leader Crystal Quade (D-Springfield) said the meeting went well but, in a statement, released Monday, she said the governor’s plan is “an election season ploy to change the subject after suddenly discovering that eliminating Missourians’ reproductive rights isn’t the winning issue Republicans thought it would be. It is also a textbook example of fiscal irresponsibility.”
Quade chastised the governor for previously vetoing a $500 million tax rebate (HB 1720) already passed by the state legislature following months of negotiation.
The governor responded to Quade’s statement Tuesday by saying he isn’t running any political campaign.
“Politically, I’m not running for office, I’m done with that, but the point of it is, we can afford to do it now,” Parson said.
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.
The governor will travel to St. Louis Wednesday, Columbia and Kirksville Thursday and Springfield on Friday.
The special session will start on Tuesday, September 6 at 12 p.m. inside the Missouri Capitol. Parson said the legislation will start in the Senate.
The House chamber is currently undergoing renovations and the floor is stripped down to the wood. Desks, chairs, and other equipment line the halls outside of the lower chamber. When asked, Parson said he has been told the construction should be finished by the end of August.