Cutting Taxes and Growing Agriculture
The Senate was back at the State Capitol this past week for an extra legislative session held concurrently with the constitutionally mandated annual veto session. While in Jefferson City, the Senate passed legislation that would enact the largest income tax cut in state history. We also approved a number of incentives to grow Missouri’s agricultural economy. Both measures now move to the House of Representatives for its approval.
Senate Bill 8 includes a variety of incentives aimed at expanding economic opportunities for agricultural producers. Taken together, the various provisions of the bill could inject up to $40 million back into Missouri’s agricultural economy. The bill is nearly identical to House Bill 1720, which passed in May but was vetoed by the governor due to language that authorized important agricultural tax credits for just two years. The legislation the Senate approved this week extends these programs for six years, addressing the governor’s concerns with the bill.
The revised ag bill renews several programs administered by the Missouri Agricultural and Small Business Development Authority (MASBDA) that expired at the end of last year. The bill also includes new tax credits for biodiesel and ethanol production and sales, a renewal of incentives to expand meat processing facilities, support for urban farms and specialty crop producers and a measure that will encourage Missouri timber producers to convert sawdust and other waste materials into energy. The legislation also expands eligibility for programs offered through Missouri’s Family Farms Act, eases regulations on logging trucks and streamlines oversight of anhydrous ammonia distributors. All of these provisions were good for Missouri’s rural economy when originally passed as part of HB 1720, and now they’re even better under the new law, which gives producers more time to apply, arrange financing and reap the benefits of these incentives.
While the provisions of SB 8 will benefit agricultural producers, the impacts of two legislative proposals combined into one measure, Senate Bills 3 and 5, will reduce taxes for Missouri wage earners. If approved by the House, SB 3&5 would lower Missouri’s top income tax rate to 4.95% beginning in the 2023 calendar year. Currently, most Missourians pay 5.3%. The bill also includes automatic triggers to further lower the tax rate whenever state revenue exceeds certain thresholds. The top rate – which is paid by nearly all wage earners in Missouri – would fall to 4.5% if all anticipated conditions are met within five years. Individuals reporting less than $14,000 per year ($28,000 for couples filing jointly), will owe no state income tax whatsoever. An analysis by the Office of Administration’s Budget and Planning Division estimates the new law would save Missouri taxpayers more than $300 million in 2023, and possibly as much as $1 billion by the time it’s fully implemented.
Both bills will need to be approved by the House of Representatives before they head to the governor’s desk. The lower chamber has already passed an alternative version of the agriculture bill that closely mirrors the Senate version, so I’m confident we’ll get this done one way or another. It remains to be seen what the House chooses to do on the tax bill. They could approve the Senate bill as written, make changes or draft their own. The Senate is expected back in Jefferson City at the beginning of October to take up whatever they send us.
It’s my honor to serve as your senator for the 16th District. If you have questions or need any assistance, please call my office at 573-751-5713 or log onto my webpage at https://www.senate.mo.gov/brown for more information.