Work beginning on a new tax-cuts bill

Local lawmakers cite need to boost economy

Legislative leaders still must write it, but they say make no mistake — a tax cuts bill will be back in the General Assembly’s 2014 session that begins Jan. 8.

“Missouri’s economy has been relatively stagnant compared to states with lower tax rates than ours,” state Rep. Jay Barnes, R-Jefferson City, said last week after lawmakers failed to override Gov. Jay Nixon’s veto of a bill cutting income taxes by a half-percent over at least a decade.

“We know that the approach that we’ve been taking with economic development isn’t leading to robust job growth,” Barnes added. “We know from history, at least on the federal level, plenty of examples where rates have been reduced and revenues have been increased.

“I think this bill was an example that would have done that in Missouri.”

Nixon’s six-page veto message raised a number of issues with the bill lawmakers passed last spring, which the governor called “an ill-conceived, fiscally irresponsible experiment that would inject far-reaching uncertainty into our economy.”

But, the governor also pointed to tax law changes he’s supported in the last 41⁄2 years, including “targeted tax cuts for small businesses that create good jobs” and the elimination of “the outdated franchise tax on employers and the income tax on military pensions for our veterans.”

Sen. Mike Kehoe, R-Jefferson City, said at the end of Wednesday’s veto session: “The governor has been very vocal — and has committed many, many times to many members (of the Legislature), including myself — that he would sit down and work on meaningful tax policy reform.

“We haven’t done it in 100 years, and I think it’s only fair to say to Missourians: If we can get to some revenue stream, some comfortable level where we can operate state government efficiently, that we ought to be able to give Missourians their money back when we can.”

House Majority Leader John Diehl, R-Town and Country, told reporters last week the new tax cuts bill will be more streamlined than the one Nixon rejected this year.

“There were, arguably, some flaws or defects in (it),” he said. “People are trying to work their way through that.

“I suspect we’re going to try to pass that without those problems or issues on it.”

One of Nixon’s concerns was an immediate half-percent income tax cut after Congress passes what’s been called the “Marketplace Fairness Act,” which would impose taxes on Internet sales similar to the sales and local taxes that Missouri and other states charge on local sales.

The way this year’s proposal was written, Nixon said, the state could have faced an estimated, one-time $1.2 billion cut in revenue.

While Diehl and other tax-cut supporters think the governor’s estimate was wrong, Diehl doesn’t “know how it can” return in next year’s bill.

Still, like Barnes and Kehoe, Diehl said Missouri has to do something.

“We believe that — you cut tax rates and it creates more economic activity, businesses are more likely to expand and grow here,” he said, “and you actually generate more revenue than you had before the tax cut.”

Legislative leaders also said Nixon should take a lesson from having 10 of his 33 vetoes overridden last week.

Senate President Pro Tem Tom Dempsey, R-St. Charles, explained: “I think there’s a direct correlation between the number of bills that were overridden and the governor’s lack of engagement in the legislative process — not only this year, but over the last five years.

“He could have, by working with the Legislature, made this veto session a lot smoother.”

And, Kehoe said: “If the governor and his staff ... can get involved at an earlier point, I think that we can have a better communication strategy with each other that is more beneficial to all.”

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