By DAVID A. LIEB
JEFFERSON CITY, Mo. (AP) - A new proposal intended to keep pace with tax-cutting Kansas would shave Missouri's income tax rates for rich and poor residents while also reducing taxes for businesses. But to partially offset the lost tax revenues, shoppers could be charged more at stores and online.
The revised legislation by Sen. Will Kraus was expected to debut for debate Wednesday in the Missouri Senate, where chamber leaders have pledged to try to bring a tax-cutting plan to a vote within the next couple weeks.
Kraus, R-Lee's Summit, is proposing to gradually reduce the state's income tax rate by 1 percentage point over five years while gradually increasing the state sales tax by one-half of a percentage point over that same period.
In addition to an overall income tax cut for individuals and businesses, the new plan would roughly double Missouri's current income tax deduction for people with adjusted gross incomes of less than $20,000 annually. The legislation also attempts to boost tax collections by tightening the requirements for when retailers must collect Missouri taxes and by joining a multi-state compact that collects taxes from online sales.
When the income tax cuts are partially offset by the sales tax increases, the net effect could be a more than a $600 million reduction in state tax revenues, according to estimates from Kraus' office.
Kraus, who is chairman of the Senate Ways and Means Committee, had brought a plan to the Senate floor last week that included income tax reductions only for businesses and for residents with income above $7,000 annually. He said he added the additional income tax deduction for lower-income residents at the request of Sen. Maria Chappelle-Nadal, D-St. Louis. He added the sales tax provisions in an attempt to bring down the amount of lost state revenues.
Senate Majority Leader Ron Richard, R-Joplin, has said that he wants to vote on the tax overhaul legislation before lawmakers depart for their annual spring break that begins March 15.
Missouri lawmakers have a greater impetus to enact widespread tax cuts this year because of recent tax changes in neighboring Kansas. A law that took effect this year reduced individual income taxes in Kansas, increased standard deductions and exempted the owners of 191,000 partnerships, sole proprietorships and other businesses from income taxes.
Some Missouri officials fear that businesses and residents in Kansas City and other western Missouri towns will move across the state line to take advantage of Kansas' tax cuts. But other Missouri lawmakers have cautioned their colleagues against trying to copy Kansas.
The Kansas tax cuts have contributed to a projected $267 million budget shortfall for the fiscal year beginning in July. Kansas Gov. Sam Brownback, a Republican, has proposed generating state revenues by eliminating income tax deductions for the mortgage interest and property taxes paid by Kansas homeowners. He also wants to cancel the scheduled expiration of a temporary sales tax increase.
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