By Anika Austvold and Kennedy Voss, Missouri News Network
Lawmakers staked out familiar stances April 16 on the effort to eliminate the state’s income tax after the Senate’s late-night approval.
House Joint Resolution 173 & 174, passed after limited discussion early Thursday, would expand transaction-based taxes in order to eliminate income tax over time.
Senate changes will have to be addressed by the House, which can either accept them or request further negotiations with the Senate.
Majority Floor Leader Sen. Tony Luetkemeyer, R-Parkville, said the legislation is intended to provide tax relief and strengthen Missouri’s economy.
“Eliminating the individual income tax represents the largest middle-class tax cut in state’s history,” Luetkemeyer said.
If finally approved by the legislature, the change would have to be approved by voters in November.
Luetkemeyer said this legislation aims to help Missouri keep up with other states in competition for jobs, residents and investment.
“Missouri needs tax reform to retain and attract small businesses, to keep families here in Missouri and grow our economy,” he said.
The sponsor of the resolution, Sen. Curtis Trent, R-Republic, explained the legislation includes protections intended to maintain revenue levels and protect local governments.
“There are numerous guardrails in the legislation to ensure this is a revenue neutral measure when fully implemented and it’s not a tax increase on the people of Missouri,” Trent said.
Trent also noted that local governments would have options to adjust tax rates after required rollbacks.
“They can either lower the overall sales tax rates, they can lower real residential property tax rates, lower personal property tax rates, or in cities that have an earnings tax, they may use that money to reduce their or eliminate their earnings tax,” he said.
Despite members of his party abstaining from debating the resolution on the floor, Minority Floor Leader, Sen. Doug Beck, D-Affton, said the plan could increase costs for many residents and shift the burden of taxation.
“The people hit the hardest are retirees, senior citizens and disabled,” said Beck. “They may pay no income tax now but will pay higher sales taxes.”
Those opposed to the legislation included Republican Sens. Joe Nicola, R-Grain Valley, Mike Moon, R-Ash Grove, and Lincoln Hough, R-Springfield.
“I have no constituents, and I’m honest about this, not one that is talking about income tax and to phase it out,” Nicola said. “But I’ve heard hundreds on property tax before ... and that’s been my priority.”
He emphasized property tax reform had been identified as a priority by the Republican caucus but had not yet been addressed, and with only four weeks left in the session, the probability of that happening is dwindling.
“We’re now gonna take all kinds of time, legislative time, debating, arguing and trying to figure this whole thing out. I just don’t think it’s good,” Nicola said.
Nicola also raised concerns about expanding taxes to services.
“If you look at the bill, it’s kind of across the board … you can start taxing whatever,” he said.
House Minority Leader Rep. Ashley Aune, D-Kansas City, said she was surprised at the lack of opposition from Democrats in the Senate.
“I was surprised that we didn’t see more robust opposition or serious filibuster effort from the Senate Democrats,” Aune said.
“I don’t pretend to know what negotiations look like behind closed doors ... but one thing I can say is that I can’t imagine a scenario in which I would sit down on the largest proposal to raise taxes for Missourians.”
Aune also spoke about how the bill authorized a vote that would go on the ballot in November instead of eliminating income tax through statute, which Republicans would likely be able to accomplish due to their supermajority.
“They’re asking for voter approval because they absolutely intend on raising our taxes,” Aune said. “I want to make sure that is what Missourians hear, because that is exactly what is happening.”