Representative Ed Lewis's Capitol Report
Legislature Prepares for Special Session to Provide Tax Relief for Missourians
Governor Parson is planning on calling legislators in for a special session either before or concurrent with our Veto Session, which by statute occurs in September. I met with Governor Parson on Wednesday at Jefferson City where he shared his plans to enact two different ideas involving taxes into one bill. The bill would replace the two items the Governor vetoed because of changes he wanted to see in those bills. Gov. Mike Parson has announced he plans to call the special session to implement a tax cut for all Missourians from 5.3% down to 4.8% and a restructuring of the state’s income tax brackets. He also wants the agricultural tax credits which were slated to have a two-year extension which he vetoed to have a six-year extension instead. These tax credits need to be extended to support our number one industry in Missouri, Agriculture. These tax credits are administered under the Missouri Agriculture and Small Business Development Authority (MASBDA).
Parson previously vetoed a $500 million one-time economic recovery tax credit that was approved by the General Assembly during the 2022 legislative session. In vetoing the bill, the governor said he prefers a permanent tax cut and that he will call a special session so the legislature can approve one.
The chairman of the House Budget Committee, who sponsored the one-time tax credit, said he also prefers a permanent cut to help Missourians facing higher prices and inflation. He said he recently met with Gov. Parson to discuss the details of the governor’s proposed tax cut.
“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 the chairman. “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.”
The chairman of the House Budget Committee noted that the state’s brackets are outdated and should be revised, if not eliminated, and doing so would help all income earners.
He said, “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.” He said they would be helping “lower income folks by addressing that top line number” and added, “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 for those lower income folks.”
Both the chairman of the House Budget Committee and the governor agree that Missouri’s healthy economy and revenue growth will allow the state to afford a tax cut.
The chairman said, “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.” He added, “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.”
The chairman 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.
He said, “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.”
I met with Governor Parson on Wednesday in Jefferson City where he shared his plans regarding the upcoming Special Session to fellow Representatives.
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