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By Sen. David Pearce
This week (week of May 5) the General Assembly won a hard-fought battle to keep Missouri on the front lines of competition in the business market and to allow Missourians to keep more of their hard-earned money.
This week, my colleagues and I in the Senate voted with the necessary two-thirds majority vote to override the governor’s veto of Senate Bill 509, legislation that offers tax cuts for many Show-Me State small businesses and families.
The following day, the Missouri House of Representatives achieved the necessary two-thirds vote in its chamber and overrode the governor’s veto to pass the first tax cut in our state in nearly 100 years.
There have been questions as to how this bill will provide monetary relief for citizens without cutting into general revenue and negatively impacting funding for our state’s needs. There are built-in triggers that will not allow any cuts to take effect unless the general revenue has increased by at least $150 million in the previous three fiscal years.
None of this legislation will go into effect for another two years. The individual income tax cut will phase in beginning in 2017. This will occur by cutting a 10th of a percent over five years, making it a half-percent cut over five years. This will affect every family in Missouri. For example, a family of four with a combined income of $44,000 annually will save around $32 a year.
In addition, another provision will help struggling families. For those making less than $20,000 in adjusted gross income, an increase of $500 will be added for a personal income tax exemption.
Missouri is well-known for its small businesses, from the mom and pop kinds of stores to the local mechanics and grocers in our small towns. Once fully implemented, this bill puts in place a 25 percent tax deduction for all small businesses. With this tax reduction, those locally owned businesses will have more stable financial footing and will be able to potentially hire more employees or provide their clients with increased products. A family of four with a business owner who makes $100,000 per year will save about $1,600. This will benefit the entire Missouri economy.
Missouri has lagged in growth over the recent years. The economic downturn that began at the end of the last decade has affected each and every level of our state and local economy. Across this country, 18 states cut some form taxes in 2013. It is in our best interest to remain competitive as a state and allow our businesses to do the same. If we wait until everyone else has made these tough decisions, then we are still behind the movement.
Tax reform is never easy, and neither are the economic choices that have to be made if we are to move forward into the future. This bill and these reforms will help ensure Missouri has a constant and unwavering economic base for a strong tomorrow.
As always, please feel free to contact me or my staff with any questions or concerns at any time. We look forward to hearing your comments and suggestions and trying to answer any questions you may have. You can reach us by phone at 866-277-0882 (toll-free) or 573-751-2272, or by fax at 573-526-7381.