Jefferson City, MO 72° View Live Radar Tue H 89° L 66° Wed H 89° L 70° Thu H 93° L 70° Weather Sponsored By:

Mo. House approves tax break for small businesses

Mo. House approves tax break for small businesses

January 19th, 2011 in News

The Missouri House gave first-round approval on Wednesday to a tax break for small businesses, a priority for the chamber's Republican leaders.

The legislation, the first bill to be debated on the House floor, would allow businesses to claim a $10,000 state income tax deduction for each new full-time job created that at least matches the county's average wage. The tax deduction doubles if the business also pays half of the new workers' health insurance premiums. It could be claimed starting in the current tax year.

Legislative staff estimate that the deductions would translate into a tax break of $600 to $1,200 per job. The bill is estimated to cost state general revenue $224,000 next year and $301,000 the following year.

Supporters said the measure is designed to help small businesses, though they acknowledge it might not be the deciding factor in whether to add new jobs. They contend that Missouri needs to explore a variety of ideas for boosting economic development.

"We should leave no stone unturned," said House Small Business Committee Chairman Dwight Scharnhorst, R-St. Louis.

Besides tax breaks, the legislation also extends a ban on raising fees unless approved by the Legislature or needed for a federal program. Existing restrictions on new state regulations affecting businesses also would be expanded to cover firms with more employees.

Another provision in the legislation would require state lawmakers to approve federal mandates before the rules are implemented in Missouri. Sponsoring Rep. Denny Hoskins, R-Warrensburg, said the federal mandates can be a problem for employers.

The legislation picked up bipartisan support and was approved 142-17. It needs another vote before moving to the Senate.

Rep. Stacey Newman said there are no guarantees the legislation will boost employment but that the bill is a legitimate attempt.

"This is hard, really hard. But this is something," said Newman, D-St. Louis.

Nonetheless some Democrats objected to the federal mandate portions while others questioned whether the proposed tax deduction was large enough to persuade businesses to renew hiring.

Democratic Rep. Jill Schupp, of St. Louis, said the proposal was "sprinkling fairy dust" and designed more to attract attention. She said the attempt to allow state lawmakers to block federal rules sounded "secessionist."

House Speaker Steven Tilley acknowledged to reporters that there are constitutional concerns about whether a state legislature could actually nullify a law passed by Congress.

"Our effort is to make sure that we at least, at minimum, send a message that enough is enough," said Tilley, R-Perryville.