Tag: taxes

Income tax cut, reform likely topics in expected special session

      A tax break for most Missourians and a restructuring of the state’s income tax brackets will likely be considered by legislators in a special session that Governor Mike Parson (R) is expected to soon call.

Representatives Peter Merideth (left) and Cody Smith (Photo: Tim Bommel, Missouri House Communications)

      That’s according to House Budget Committee Chairman Cody Smith (R-Carthage), who says he’s looking forward to seeing what the Governor outlines in a plan to be aimed at helping Missourians facing high prices and high inflation.  The top Democrat on the Budget Committee, Peter Merideth (D-St. Louis), says he wants a plan that goes beyond changing income taxes, so that all Missourians would be helped; not only those who pay that.

      Governor Parson earlier this month vetoed a proposed $500-million tax rebate plan sent to him by legislators in May, saying he prefers a permanent tax cut.  He has said he will call for a special session of the legislature to consider that cut. 

      Smith, who spearheaded that tax rebate plan as the best proposal thought possible at the time, said he would also prefer a permanent cut.  He spoke to Parson on Tuesday to get a better idea of what the governor might propose.

      “We are busy now collaborating with the senate and the governor himself to try to find a starting point and then from that point the legislature will take over and will hopefully put forth a good product, at the end of the day, for the governor to sign,” said Smith.  “It’s important that we try to keep this simple and try to make it as impactful to as many Missourians as possible.  I think the income tax is the best way to do that, and trying to simplify the tax code in the process I think is also a worthy goal.”

      Merideth said he and fellow Democrats were glad that the rebate plan was vetoed, but he’s concerned that a cut to the income tax won’t help the Missourians who need help the most. 

      “A third of Missourians don’t make enough money to pay [the income tax], and those are, of course, the third of Missourians that are having the hardest time right now, so if all we’re focused on is a tax cut on income, that’s not really a big help for people,” said Merideth. 

“That said, our income tax brackets are completely out of date.  We haven’t had updated brackets in like 100 years.  Democrats have actually long advocated for updating those to a more progressive tax rate structure.  Now, we have yet to see what that proposal’s going to look like but there’s a path that we could get on board with,” he added.  “Democrats are generally supportive of relief for those that make the least and generally resistant to relief for those that are doing just fine, at the expense of our long-term budget.”

      Smith agrees that the state’s brackets are outdated and should be revised, if not eliminated, and doing so would help all income earners.

      “Our highest tax bracket in Missouri is for anyone that makes over $9,000 annually.  At one time that was a considerable amount of money … but now most folks who work at all generally make more than $9,000 per year … so we [would be] helping lower income folks by addressing that top line number.  Additionally I think we can take a look at some of the tax brackets on the lower end and see if we can reconfigure those or eliminate those entirely so that folks on the lower end of the income spectrum won’t pay taxes up to a certain amount.  That would provide relief on those lower income folks.”

Merideth thinks permanently cutting the income tax right now is not a good idea.  He said the state is in a great position with revenue right now, but the next time there’s a downturn, cuts made now could put the state in a bad position. 

The governor has expressed confidence that Missouri’s good fortune will continue, and Smith agrees. 

      “I would guess that we may have a general revenue surplus in excess of $2-billion by the time we come back to the next legislative session and that is just unprecedented … we’ve got federal money set aside for Medicaid, we’ve got general revenue dollars sitting in the state’s treasury for all purposes, and I think there’s never been a better time to cut taxes and still be able to protect the priorities that we have in the budget,” said Smith.  “I think we’re probably looking at 3 to 5 years where we are very well situated even after a tax cut.”

      Smith said while the state is enjoying increased revenues and never-before-seen surpluses, Missourians are dealing with high inflation, high gas prices, and other factors that are causing many to struggle.  He said this is the right time for the legislature to do something to help.

      “Rather than issue stimulus checks, which is talked about in Washington from time-to-time, certainly we’ve seen that … I believe the best way to combat things like inflation is let [Missourians] keep more of their own money,” said Smith. 

      Merideth said he and other Democrats would also like to see the legislature talk about things besides the income tax, such as eliminating taxes on groceries and other essentials.   

      The governor has said he is also planning to have the legislature consider six-year extensions to tax credits under the Missouri Agriculture and Small Business Development Authority.  He vetoed a bill that would have extended them by two years.

      Dates for a special session have not been set. 

Legislature votes to strengthen Kansas City’s shot at World Cup

      The Missouri legislature has offered an assist to Kansas City’s bid at bringing the World Cup to Kansas City, and with it, hundreds of millions of dollars to the state’s economy. 

Representative Jonathan Patterson (Photo credit: Tim Bommel, Missouri House Communications)

      “It’s estimated that it would bring $750-million to the state.  You’re going to need 50,000 hotel rooms.  [Fans] are going to come from all over the world and get to see all of Missouri.  They’re going to travel within Missouri and the country,” said Representative Jonathan Patterson (R-Lees Summit).  “100-million people watch the Super Bowl.  One billion people will watch the World Cup, so this is equivalent to 7 to ten Super Bowls.”

      The House and Senate passed legislation that would exempt tickets to the 2026 World Cup from sales taxes if it is held in Kansas City, which is one of 22 cities among 16 potential host sites vying for the event. 

      Patterson, who has spearheaded the effort in the House to get this legislation passed, said FIFA (the International Federation of Association Football) stipulated that whatever state hosts the World Cup not charge sales tax on their tickets.  He said Missouri would be the first state to meet that requirement, assuming Governor Mike Parson (R) signs into law House Bill 1606 and/or Senate Bill 652, both of which were sent to him last week. 

Legislators say the measure is a priority for the governor.

      “So we are going to be first in the organizers’ minds about states that have filled out a criteria that they wanted to meet before awarding a host site,” said Patterson.  “So I think with [these bills] we put ourselves in a very good position to get a host site.”

      Representative Wes Rogers (D-Kansas City) said this legislation was in no way just about Kansas City.

Representative Wes Rogers (Photo credit: Tim Bommel, Missouri House Communications)

      “People from as far away as the Lake [of the Ozarks] will need to provide housing.  There’s not enough housing in [Kansas City] and there won’t be.  You’re talking about people staying in Columbia, probably even Jefferson City and the Lake, so it’s statewide economic impact,” said Rogers.  “And they’re going to be here for a month, too, and there’s only a few soccer games, so they’re going to be going back and forth from Kansas City to St. Louis, and they’re going to go down to Springfield, and they’re going to see what else is around.  It’s not just the games, it’s also everything people are going to do while they’re here.”

      Rogers is quick to note that while the legislation would exempt taxes on the tickets, it will not exempt taxes on all the other places people will spend money while attending the World Cup. 

“For every hotel room, for every meal that they eat, for any time they go to the convenience store they’re going to be paying a lot of taxes, just not on the tickets themselves.”

      Both representatives say Kansas City is a great sports town with impressive facilities to go with good food and other draws, and they would hold it up against the other potential host sites.

      “I think this would put it on the map and really showcase it to the world,” said Patterson.  “I think with [these bills] we put ourselves in a very good position to get a host site.”

      The proposed exemption has broad bipartisan support.  The House vote on SB 652, which included only that language, was 141-5.  That bill and HB 1606 are awaiting action by Governor Parson.

House plan would ease late payment penalties, interest, in response to surprise tax bills

The House has given preliminary approval to giving Missourians a break on late payment of taxes, because many Missourians might have been surprised this year with a higher-than-anticipated tax debt.

Representative Dean Dohrman (photo: Tim Bommel, Missouri House Communications)

“I’m also frustrated with the situation that brought us here, but today we can’t do anything about that,” said La Monte representative Dean Dohrman (R), the sponsor of House Bill 1094.  “But today, as Winston Churchill once said, ‘We can do the best we can with what we got.’”

HB 1094 would block late payment penalties on tax debt owed to the state by individual taxpayers through the end of this year.  It would also waive any interest owed on such debt until May 15.  For those who might pay penalties before the bill would become law, it would require that those Missourians receive refunds.

The bill is a bipartisan response to an issue with the Department of Revenue’s tax tables that resulted in many Missourians being faced with greater debt than expected.  Lawmakers heard stories of individuals who anticipated a tax refund from the state instead getting hit with bills for hundreds, or even thousands, of dollars.

Representative Nick Schroer (R-St. Charles) is the vice-chairman of the House oversight committee that’s been investigating that situation.  He said the Department’s explanations have changed, and he blames its former director, who resigned last month amid the crisis.

Representative Crystal Quade (photo: Tim Bommel, Missouri House Communications)

“We still don’t really know the true cause of what is happening.  We’re still digging and trying to figure that out, but I think this is one way that we can lessen this tax burden on these people who … dollars count to these people, whether it’s diapers, groceries,” said Schroer.

That oversight committee has continued to schedule hearings to investigate what caused the problems and how the Department responded.

House Minority Leader Crystal Quade (D-Springfield) also sits on that oversight committee, and pre-filed similar legislation in December.  She said the Department knew about the tax issue as early as September yet didn’t act for months to notify taxpayers.  She said she’s frustrated the House is only now taking action.

“Tax day’s in five days.  If folks in this body … I mean I hate to say it; if we were really concerned about these surprise tax bills and what was happening to citizens, we would’ve dealt with this much, much sooner,” said Quade.

“I heard time and time again from the director of revenue as well as the liaison that this isn’t a lot of money – that we’re talking an average of $85 or it could be upwards of several hundred dollars, and as I said before we have [legislative assistants] in this building who are seeing swings of $3500,” said Quade.

Lawmakers including Columbia Democrat Kip Kendrick, another oversight committee member, want Missourians to understand that their issues with tax debt might not be over after this year.

Representative Nick Schroer (photo: Tim Bommel, Missouri House Communications)

“If they’re concerned with their bill this year then they need to go back and look at their W-4 because next year, 2019, their current year, it’s going to be a full four quarters of potential under-withholding and not just three quarters,” said Kendrick.

Republicans, including Noel representative and oversight committee member Dirk Deaton, maintain that while some Missourians could see greater tax bills this year, changes in the federal tax code mean their overall debt is down.

“Missourians are keeping more money in their pockets, so we’ve got to fix this withholding thing but at the end of the day Missourians, as they should, are keeping more of their hard-earned money,” said Deaton.  “That’s what I think people need to realize.”

Another favorable vote would send HB 1094 to the Senate.

Gas tax increase goes from legislature to voters on November ballot

The legislature is asking voters whether they want to increase Missouri’s gas tax to pay for road and bridge work and to boost support of the Highway Patrol.

Representative Jean Evans (photo; Tim Bommel, Missouri House Communications)

The House voted 88-60 to complete passage of House Bill 1460.  It would ask voters in November whether to increase the state’s fuel tax by two-and-a-half cents a year for four years – a ten cent total increase by July, 2022.  The current tax is 17-cents per gallon.

If passed, projections are the increase would generate about $421-million when fully implemented.  $128-million would be for local governments for road construction and maintenance.  The remaining $293.3-million would be appropriated by the General Assembly between the Department of Transportation to be used solely for road and bridge work, and the Highway Patrol.

Representative Jean Evans (R-Manchester) sponsored HB 1460, which was amended by the Senate to include the gas tax proposal.

“This is a vote to allow the people of Missouri a vote on how they want to pay for roads and bridges, how they’d like to fund their law enforcement,” said Evans.  “Send this vote to the people.  This is a vote for freedom and for safety.”

Kansas City Democrat Greg Razer said he was glad to see the House considering the ballot issue that would give the state a chance to take on pressing road and bridge work.

“We have these projects all over Missouri.  We need to address it.  This is a fantastic opportunity to allow the people of Missouri to make a decision on the future of our roads and bridges,” said Razer.

Kansas City Republican Kevin Corlew chaired the 21st Century Missouri Transportation System Task Force.  It recommended a gas tax increase to help support transportation funding.  He said whether such an increase will happen should be up to voters.

“Allow our citizens the opportunity on the November ballot to make a choice and to determine whether or not we can go forward with the 21st century Missouri transportation system, or will we be stuck with the transportation system that was built in the 20th century and continues to be funded with 20th century dollars.” said Corlew.

The House vote sent HB 1460 to the Secretary of State, who’s office is preparing it for the November ballot.  Many of the 60 “no” votes were cast by Republicans.

Representative Phil Christofanelli (photo; Tim Bommel, Missouri House Communications)

St. Peters representative Phil Christofanelli (R) called the proposal a “massive” and “deceptive” tax increase.

“The voters already had an opportunity to vote on raising taxes for transportation.  They said, ‘no,’ and here we are, coming back today, poll testing different ideas, how can we sell this idea that the voters have already rejected?”  said Christofanelli.  “We’re all going to go back to our districts – many of us in this [Republican] majority – and tell people how conservative we are, we are conservatives.  The voters believe that conservatives are here to shrink the size of government and not to grow the size of government, and that is exactly what we’re doing today.”

Representative Rocky Miller (R-Lake Ozark) said this measure is flawed and he will oppose it even though his district needs road maintenance and improvements.

“My district will come after me like a crazy person for voting against this, but there’s no way in the world I’m voting for this, and if it passes I’m going to work my guts out to kill it at the poll,” said Miller.

HB 1460 was originally a bill that would waive state tax liability on cash prizes awarded to Olympic medalists.  Another provision in the bill would create an “Emergency State Freight Bottleneck Fund,” that would pay for road projects costing $50-million or more that would relieve bottlenecks or delays of 20 minutes or more on Missouri roads.

The bill would also allow alternative fuels to be taxed at a substantially equivalent rate by 2026.

Because it was changed to include the ballot language for the gas tax, the language voters will see on the ballot will also ask them whether the state should waive tax liability for Olympic medal winners and could include language about the Bottleneck Fund as well.