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“Highlights with Hegeman” for the Week of Sept. 26: Cutting Taxes

The Missouri General Assembly has the opportunity to make a major statement about what kind of state we are and want to be. Earlier this year, lawmakers sent to the governor two key pieces of legislation that relate to taxes. House Bill 2090 contained language that would give certain Missouri taxpayers a one-time rebate, if they met certain qualifications. House Bill 1720 extended many agricultural tax credits for just two years. The governor vetoed both measures because he believed the Legislature can go one step further.

In calling for an extra legislative session, he asked legislators to go beyond a once-only tax rebate and cut the state’s top income tax rate to 4.8 percent, something that I believe will bring real relief to everyone who pays taxes in our state. In addition, he asked us to extend the sunset on several agricultural tax credits to six years. These credits have proven themselves to be beneficial to our state, in some cases, showing a 7:1 return on investment.

After several different proposals were introduced in both the Missouri Senate and House of Representatives, senators worked together to come up with a compromise that fulfills the governor’s call for the extra session. The final vehicle for an income tax cut was Senate Bill 3, but the compromise added elements of Senate Bill 5 into the mix. Current law would cut the top income tax rate to 4.8 percent over a period of years, only if certain general revenue collection triggers are met. Senate Bills 3 & 5 would cut the rate to 4.95 percent next year. Then, further cuts would continue, as long as certain economic criteria is met. Under this plan, the top rate could eventually be reduced to 4.5 percent.

Current law also exempts the first $100 of a taxpayer’s income from taxation. Starting next year, SBs 3 & 5 would exempt the first $1,000 of income from taxation.

Senate Bills 3 & 5, plus Senate Bill 8, have been sent to the Missouri House of Representatives for consideration. Senate Bill 8 addresses agricultural tax credits. We hope to see these measures move quickly through the Missouri House, and then to the governor for his signature. To me, these are great ideas that will lift a tremendous burden from state taxpayers. Ultimately, they could prove beneficial for bringing in not only more people to our state, but more high-paying jobs. I am happy with what the Legislature has put together and hope it soon becomes state law.

As always, please feel free to call, email or write with your ideas or concerns. My Capitol office number is (573) 751-1415, my email is dan.hegeman@senate.mo.gov and my mailing address is Room 332, State Capitol Building, Jefferson City, MO 65101.