JEFFERSON CITY, Mo. (AP) - A Missouri lawmaker says Republican President-elect Donald Trump's promises to slash corporate income taxes could lend momentum to his proposal to eliminate the taxes completely in the state, a move that would make Missouri one of few states without business income taxes.
Republican state Sen. Will Kraus told The Associated Press that Trump's support for reducing such taxes could open the door to axing corporate income taxes on the state level. Kraus will introduce a bill during the next legislative session beginning in January that would phase out the state's current 6.25 percent corporate income tax.
"I see an opportunity for us to be able to market Missouri as a corporate tax-free state," Kraus said. He called the measure a "job-creation" bill.
Under Kraus' bill, the tax would drop to 4 percent in 2017 and 2 percent in 2018. It would be eliminated in 2019.
Senate Majority Leader Mike Kehoe said Republicans could consider a reduction or elimination of the corporate income tax as part of a broader agenda to spur the economy. But Kehoe said Republicans had not yet coalesced around a specific tax-cutting plan.
Missouri would join only two other states without corporate income taxes or another business tax if the measure becomes law, said National Conference of State Legislatures' tax expert Mandy Rafool. She said states such as Texas, Washington and Nevada also don't have corporate income taxes but impose other business taxes.
Forty-four states levy a corporate income tax, ranging from 4 percent in North Carolina to 12 percent in Iowa. Missouri's flat rate of 6.25 percent is lower than the top corporate income tax rates in most of its surrounding states.
Kraus touted his proposal as a way to draw businesses to Missouri, which he said would result in more jobs and an increase in personal income taxes. He noted corporate income taxes are a comparatively small source of revenue for the state. Revenue from that tax makes up 3 percent of total revenues, according to the most recent report from the Office of Administration, which oversees the budget. That pales in comparison to individual income and sales taxes, yet a drop in corporate taxes still can affect the budget.
Kraus' proposal comes as outgoing Democratic Gov. Jay Nixon has cut about $200 million in planned spending in an attempt to balance the budget. Nixon cited lagging revenue from corporate income taxes as partly to blame during his most recent round of budget cuts Wednesday.
"It's certainly not the time, when you're already struggling to pay the bills, to cut off another source of funding for education and infrastructure," said spokeswoman Traci Gleason of the liberal Missouri Budget Project. Gleason also cited the possibility of declining revenue from additional personal income tax cuts, which will kick in if state revenue grows by $150 million.
Gleason said cutting corporate income taxes "is not a way to stimulate the economy or encourage growth" and is not a top priority for businesses looking to expand or move.