Missouri's Republican-led Senate voted Monday to override the veto of an income tax cut by Democratic Gov. Jay Nixon, setting the stage for a final showdown in House to determine whether the tax cut will become law.
The Senate's 23-8 party-line vote was just enough to meet the constitutional requirement of a two-thirds majority. But for the override to succeed in the House, majority Republicans will need the support of at least one Democrat.
The legislation would gradually reduce Missouri's top individual income tax rate from 6 percent to 5.5 percent and phase in a new 25 percent deduction for business income reported on personal tax returns. The incremental tax cuts would begin in 2017, but only if state revenues continue to grow.
While vetoing the bill last week, Nixon denounced it as an "ill-conceived, fiscally irresponsible experiment" that could jeopardize funding for public education and state services. Senate Democrats echoed those concerns Monday.
Republicans contend the tax cut will boost the economy and help Missouri compete with other states while still guarding against large hits to the state budget.
"This is a great bill that has protections in it, that's going to help move Missouri forward," said sponsoring Sen. Will Kraus, R-Lee's Summit.
In addition to reducing the top income tax rate, the legislation would phase in a new 25 percent deduction for business income reported on personal tax returns. Each incremental cut would occur only if state revenues grow by at least $150 million over their high mark from the previous three years.
The legislation also would increase a tax deduction for low-income residents and make annual adjustments to Missouri's tax brackets based on inflation, which could effectively result in perpetual tax cuts.
Missouri's tax cut is a less aggressive version of measures recently enacted in Kansas, which lowered its top tax rate and fully exempted certain categories of businesses from taxes.
Last week, Moody's Investors Service downgraded Kansas' credit rating, noting its sluggish economic recovery compared with other states. Kansas revenues declined in April. Among other things, Moody's said the income tax cuts were putting pressure on the budget and creating risk for the state's financial future.
Democrats warned that Missouri could face a similar situation.
"This bill is designed to weaken our ability to pay for schools," said Senate Minority Leader Jolie Justus. "It's designed to weaken our state government."
Earlier version of story....
Missouri's Republican-led Senate has voted to override the veto of an income tax cut by Democratic Gov. Jay Nixon.
The 23-8 party-line vote Monday was just enough to meet the constitutional requirement of a two-thirds majority. The measure now goes to the House, where Republicans will need the support of at least one Democrat to meet that threshold.
The legislation would gradually reduce Missouri's top individual income tax rate from 6 percent to 5.5 percent and phase in a new 25 percent deduction for business income reported on personal tax returns.
Republicans contend the tax cut will boost the economy and help Missouri compete with other states.
Nixon has denounced it as an "ill-conceived, fiscally irresponsible experiment" that could jeopardize funding for public education and state services.