Analysis: It's wish-list time for Missouri businesses

Like children anticipating an especially good Christmas, Missouri business groups are eagerly compiling their wish lists following an election that gave Republicans their largest legislative majorities in about a century.

They have good reason to hope. The incoming Republican leaders have made businesses - and the jobs they provide - the top priority for the legislative session that begins Jan. 5.

Republicans will "put forth a pro-job-creation, pro-business agenda," Sen. Rob Mayer, the next likely Senate president pro tem, said after Republicans appeared to win 26 of the 34 Senate seats.

"We're going to work day in and day out to make sure that Missouri is as business friendly as we can possibly be," Rep. Steve Tilley, the expected next House speaker, declared after Republican apparently won 106 of the 163 Missouri House seats.

What does this mean for businesses?

Lower taxes in all likelihood. Greater legal protection against discrimination claims. And less exposure to potential litigation involving work place illnesses and injuries.

Extensive debate also is likely on whether Missouri should adopt the "fair tax" and become a "right-to-work" state. But such sweeping changes remain uncertain.

None of Missouri's major business groups has endorsed what some Republicans contend is the ultimate pro-job-growth move - a repeal of the state income taxes in favor of a higher sales tax applied to a broader array of services.

And though businesses might relish the possibility, the reality of making Missouri a "right to work" state - in which union dues cannot be a requirement for employment - remains a difficult chore as long as Democrats remain in the Senate and the governor's office.

So business groups are focusing on a more practical wish list.

Topping it is some form of tax relief.

An outright repeal of the corporate income tax and franchise tax could cost Missouri more than $500 million. That could be tough to enact in one big chunk, considering that incoming House Budget Committee Chairman Ryan Silvey estimates the state already is facing a shortfall between $400 million and $600 million for next fiscal year.

So a less-expensive alternative is likely.

Ray McCarty, president of Associated Industries of Missouri, is exploring the possibility of a 50 percent state tax deduction for business income, applicable both on corporate and individual income taxes. He estimates that would cost the state $127 million.

Many small business already are exempt from Missouri's franchise tax. But a possible enticement for bigger businesses could cap the maximum amount of franchise tax due by any business at $2 million, McCarty said. That might cost the state nothing in the short term, because no business paid more than $1.9 million last year, he said.

But "it gives surety to companies," McCarty said. "They could pull a lot of their assets into Missouri and know their cap on franchise tax is $2 million" - and with those assets could come additional jobs.

Another possibility: increase the reward businesses receive for submitting state sales and use taxes in a timely fashion, said Brad Jones, state director of the National Federation of Independent Business. Employers currently get to keep 2 percent of the amount due the state, which Jones said doesn't necessarily cover their costs of collecting the taxes. He suggested that amount could be doubled, which could cost the state about $90 million.

Although the exact business tax relief remains to be determined, "it will be part of the package," said Dan Mehan, president and CEO of the Missouri Chamber of Commerce and Industry.

The business wish list goes well beyond taxes.

Business groups were frustrated last year that the Republican-led Legislature failed to pass a bill making it easier for businesses to defend themselves against discrimination lawsuits. They contend state court rulings have made Missouri's standard of proof in discrimination cases more lax than the federal standard.

Business groups also want to tinker with Missouri's 2005 workers' compensation law, which was enacted a top priority after Republicans posted big gains in the 2004 elections. That law generally made it more difficult for injured people to win workers' compensation claims.

But since then, courts have interpreted the law in a way that businesses didn't anticipate or desire. An appeals court ruling in August allowed an injured worker to proceed with a negligence lawsuit against a co-worker after already settling a workers' compensation claim against his employer. Business groups want to prohibit such lawsuits.

They also are displeased that courts have allowed lawsuits over alleged long-term occupational illnesses - not caused by a specific event - instead of directing those claims to the workers' compensation system.

Some business interests also would like to do away the state's Second Injury Fund, which compensates people with previous injuries or health conditions who are injured again on the job.

More items are likely to be added to the wish list as business groups - and Republican lawmakers - meet in the next coming weeks.

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