Tax overhaul bill meets Republican opposition in the Missouri House
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Tax overhaul bill meets Republican opposition in the Missouri House

Date: April 2, 2013
By: Brendan Cullerton
State Capitol Bureau
Links: SB26

JEFFERSON CITY - After a massive tax overhaul bill passed the state Senate with relative ease, the measure met opposition from a House Republican that said the Senate moved too fast on the bill.

The bill, sponsored by Sen. Will Kraus, R-Lee's Summit, would increase the state sales tax by half of one percent and decrease the income tax for residents and corporations by three-fourths of one percent.

The measure was first heard in the House Ways and Means Committee on Tuesday. Rep. Kevin Engler, R-Farmington, said the Senate did not give the measure enough thought when the bill passed the Senate floor in five hours.

"I talked to three Senators and I asked what do it do, and all of them said I'm not sure, but I'm sure (the House) will fix it," Engler said. 

Engler, a former Senate majority leader, said he agrees with the idea of cutting corporate taxes, but he thinks the House will have to spend a lot of time making sure the bill won't bust the state's budget.

The bill is 205 pages long and an inch thick. It changes a multitude of state tax policies and would drastically alter how Missourians pay in taxes and how much the state has to spend.

There has been some debate over how much this will actually cost the state. Legislative staff estimated that the bill would either cost the state more than $243 million or more than $430; But the left-leaning Missouri Budget Project claims it will cost about $960 million when fully implemented in 2019.

Kraus said he thinks this estimate is unfair and incorrect, and he used a $477 million estimate during the hearing.

Opponents of the bill think it will leave the state unable to generate enough revenue to fund important items like education.

Supporters and opponents of the bill see it as a way to keep up with Kansas's recent tax reforms, but they disagree about the impact. Kansas has already passed a law reducing the income tax rate in 2013. Rep. Rory Ellinger, D-St. Louis, said following Kansas's lead is fiscally irresponsible.

"Kansas may be facing bankruptcy because of the cuts that have been made," Ellinger said. "You think that's good?"

Bill Sponsor Sen. Will Kraus said his proposal is more moderate than what Kansas has done.

"Let's be honest," Krause said. "Kansas cut $1.8 billion in one year. This bill is not anywhere near that. It's $477 million... over five (years)."

Kraus added that the corporate tax rate cuts in Kansas could draw Missouri businesses to Kansas for lower taxes.

"I think if we do nothing, we are going to lose Missouri businesses," Kraus said. "As leases come up, Missouri businesses are going to look the tax advantages and the incentives that Kansas is offering, and potentially jump the border,"

Kraus added that this threat is much more real in areas like Kansas City and Joplin, where businesses can keep the same clientŔle base after moving across state lines.

Democratic Gov. Jay Nixon has been vocally opposed to the measure. In a press release March 12 he said it would "hurt families, the elderly and veterans the most."

Other opponents of the bill have agreed with Nixon, declaring the bill as a regressive tax that puts more financial burden on low-income residents.

"If I'm the average senior citizen whose retired and living on retirement my cost would increase," Ellinger said.

The bill would need to pass the House committee, then the full House before it reaches Nixon's desk.