Tax Relief for Missourians
In 2014, the Missouri General Assembly overrode the governor’s veto of Senate Bill 509 and gave Missourians broad-based, equitable tax relief. The bill reduced the individual income tax rate by small increments of 0.1 percent a year, over a 5 year period, provided revenue targets were met. As a result, the top tax rate will be reduced from 6 percent to 5.5 percent. This legislation also phased in a business tax deduction of 25 percent.
Senate Bill 509 was an excellent first step in providing hard-working Missourians tax relief, but it amounted to a very modest tax cut. In order to provide additional tax relief, I have proposed Senate Bill 667. This legislation would double the tax cut implemented by SB 509 and lower the tax rate on individuals and businesses across the board. Under this proposal, each year the trigger is met, the top rate will be reduced by 0.2 percent, until the top rate is lowered to 5 percent.
In a hearing last week, one of my fellow senators, made the case that income taxes are the most destructive form of taxes to economic growth. And while some argue Missouri is a low-tax state, with regard to these destructive taxes, we’re the 15th highest in the nation. Ultimately, I support tax cuts like SB 667 because I believe the people of the state of Missouri know better how to spend their hard-earned money than the government does.
While there may be concerns about how to pay for this tax cut, I believe we have four major opportunities to reduce spending and provide budget stability and tax relief for Missourians:
First, we need to reduce waste and inefficiency in state government. The state’s Chief Operating Officer (COO) has identified numerous positions throughout state government that go unfilled and serve only to pad department budgets. We need to eliminate these positions and save the state money.
Second, we will never get control over our state budget until we address the waste and overutilization in Medicaid. Fortunately, the federal government is willing to grant waivers to allow us to transform our state’s healthcare system. I believe asking the federal government for a waiver is the right thing to do and I believe Senate Bill 562 is an excellent first step towards reforming Missouri’s Medicaid system.
Third, we need to enforce current laws regarding sales and use tax, including taxing internet sales. I believe a streamline sales tax approach should be utilized in order to collect sales tax and other taxes on internet purchases.
Finally, I believe we need to reform our state’s tax credit system. In a report issued by the state auditor, Missouri currently has $3 billion tax credit liability. This liability extends into the next 15 years due to tax credits previously issued by the General Assembly. Over the last decade, tax credits have cost the state more than $5.4 billion. This is real money that we should be using to improve the lives of all Missourians, not just handouts to private businesses. We need to reform and in some cases eliminate these costly tax credit programs that are not providing an adequate return on investment for our state. I believe the focus should be on investing in our citizens and their future, not private businesses looking to take advantage of the system.
At the end of the day, SB 667 is a much needed tax cut that puts money back in the pockets of hard-working Missourians and our state’s small businesses. I believe Missourians deserve tax relief, and I believe this type of tax policy is vital to attracting new businesses and job creators to our state.
Very Sincerely,
Robert F. (Bob) Onder
Contacting Sen. Onder
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