A Better St. Louis. Powered by Journalism.
  • Twitter
  • Facebook
  • Print
  • Email

Missouri Senate's first-round approval of tax cuts touches off optimism and fear

In Region

1:30 am on Fri, 03.08.13

State Sen. Eric Schmitt, R-Glendale, expects to be in a good mood this weekend, now that the core of his proposal to cut state business taxes is part of a broader bill that has won first round approval in the state Senate.

Eric Schmitt
Eric Schmitt

“It’s a pretty sweeping reform of the state tax code,’’ Schmitt said, adding that he believes Missouri is on track to see the biggest income tax changes since 1929.

But a rival in the likely losing camp -- state Sen. Jamilah Nasheed, D-St. Louis – isn’t happy about it. She fears the bill guts state revenue and will lead to massive cuts in already lean state programs.

“I truly believe it will be devastating to the state of Missouri,’’ Nasheed said.

The Senate voted Wednesday night in favor of SB26, which calls for phasing in over five years a reduction in the state individual and corporate income taxes. The state’s individual income tax rate of 6 percent would be cut to 5.25 percent; the corporate tax would go from 6.25 percent to 5.5 percent.

Final Senate approval is expected next week, which will send the measure to the state House, which also is in a tax-cutting mood.

As Schmitt has sought, the bill also creates a new individual income tax deduction for business income.  At the end of the five-year phase-in period, the deduction would amount to 50 percent of the business income.

The bill also would allow a $2,000 deduction for taxpayers who earn less than $20,000.

In exchange, the state’s sales tax would increase to 4.725 percent from the current 4.25 percent.

Jamilah Nasheed
Jamilah Nasheed

The bill also calls for taxing internet sales, which advocates say would bring in more tax money while making the marketplace fairer for Missouri businesses who now lose business to out-of-state businesses that don’t collect state sales taxes.

What concerns Nasheed is the bottom line. Schmitt and other backers of SB26 estimate that, when fully phased in, the bill will reduce state income by at least $450 million a year.

The Missouri Budget Project, a progressive advocacy group, contends that the annual cut would be closer to $700 million a year.

But Schmitt says he’s confident that, in the long run, the bill will attract more business and add more taxpayers to Missouri’s rolls. “I believe this will grow our economy. I believe we will expand our tax base, we will have more taxpayers, and a lower tax rate,” he said. “I think this puts us on a different path to prosperity.”

Nasheed isn’t so sure. And neither is Gov. Jay Nixon, who has signaled that he’s cool to SB26, particularly the provision increasing the state’s sales tax. (The governor can sign or veto the bill; if he does, Republicans will need 109 votes in the House and 23 in the Senate to overrule him.)

Kansas blamed for Missouri tax-cut focus

Nasheed contends that the loss to the state budget will be closer to $1 billion a year, and that the proposal shifts the tax burden from the haves to the have-nots.  

Backers acknowledge that the Senate tax-cut bill is in part a response to massive tax cuts in Kansas, which some in western Missouri believe has contributed to an exodus of businesses from Missouri to Kansas.

But Nasheed and her allies note that Kansas already is experiencing huge budget problems and having to make spending cuts to account for state government’s reduced income. Kansas Gov. Sam Brownback, a Republican, believes the cuts will eventually spur more growth.

In Missouri, critics of SB26 contend that the GOP backers' real aim is to do away with the state’s income tax and replace it with higher sales taxes. 

That’s the aim of some major campaign donors in the state, most notably financier Rex Sinquefield, who largely bankrolled a scuttled effort in 2012 to ask Missouri voters to make the switch from an income tax to a sales tax.  Sinquefield and allied groups, notably the Show-Me Institute, have cited the economic success in states such as Texas and Florida, that don’t have income taxes.

Backers of the proposed switch have acknowledged that so far the public isn’t keen on the idea. The Budget Project, among others, say the change shifts the tax burden from the wealthy to the poor.

But Sinquefield and his allies believe that the public will come around if it has more information – or sees success in tax-cutting states like Kansas.

Schmitt said he believes that SB26 offers a thoughtful, moderate approach for making some changes in the state’s tax code and then using the phase-in period to determine whether the tax cuts are proving successful.

He is banking that they will. Nasheed is convinced that they won’t.  And Nixon will likely find himself in the middle.

No Comments

Join The Beacon

When you register with the Beacon, you can save your searches as news alerts, rsvp for events, manage your donations and receive news and updates from the Beacon team.

Register Now

Already a Member

Getting around the new site

Take a look at our tutorials to help you get the hang of the new site.

Most Discussed Articles By Beacon Members

Conference of American nuns will mull response to Vatican charges

In Nation

7:55 am on Fri, 08.03.12

Meeting in St. Louis next week, the Leadership Conference of Women Religious will have its first opportunity as an assembled group to consider what to do after the Vatican issued a mandate for change this spring. It calls on the conference to reorganize and more strictly observe church teachings.

The 'free' Zoo

In Commentary

7:51 am on Tue, 05.22.12

When a family of four goes to the St. Louis Zoo, they can be forgiven for not knowing it will cost them $60, $72 if they park. If they can't pay, the alternative is to tell the kids they can't do what kids do at the zoo.

Featured Articles

House sends Boeing incentive bill to Nixon

In Economy

12:55 pm on Fri, 12.06.13

The Missouri House easily passed legislation aimed at attracting production of the 777x, a move that wraps up a legislative special session that saw little suspense and few surprises. The bill now goes to Gov. Jay Nixon, who has strongly supported the legislation.

Gandhi inspired Mandela on South Africa's 'Long Road to Freedom'

In World

10:10 am on Fri, 12.06.13

Nelson Mandela, who died Thursday at the age of 95, was a towering moral figure of the 20th century -- along with Mahatma Gandhi. It was no coincidence that Gandhi and Mandela, whose paths never crossed directly, both embarked on their campaigns against discrimination in South Africa. It was when Mandela won election as South Africa’s first black president that Gandhi's influence became apparent.

Featured Articles

Regina Carter brings jazz and therapy to Children's Hospital

6:36 am on Mon, 12.09.13

One night, the violinist is taking bows before a standing ovation at Jazz at the Bistro. The next afternoon, some of her audience may have trouble standing, but the kids in the playroom at Children's Hospital were no less appreciative. “Jazz is medicine personified," according to a doctor who brings in the jazz musicians.

Encore: Dead before death

In Performing Arts

12:58 am on Fri, 12.06.13

For years , the author was certain he would never come to appreciate The Grateful Dead, let alone be a Deadhead. But little by little, he's come around. He talks about his conversion and relates a real evolution: by a musician who went on to play with the Schwag, a Dead cover band.

Featured Articles

Schlichter honored with St. Louis Award

In Region

4:57 pm on Tue, 12.03.13

The attorney has founded Arch Grants, which brings together nonprofit philanthropy and commercially viable opportunitiesto fund new business startups, and Mentor St. Louis, which finds adult mentors for elementary students in the St. Louis Public School System. He was the driving force behind the state's historic tax credit program.

BioGenerator sets open house to celebrate new digs for entrepreneurs-in-residence

In InnovationSTL

12:29 pm on Tue, 11.12.13

BioSTL's BioGenerator organization is on the move as its entrepreneurs-in-residence find a new home in 4,300 square feet of office and conference space in an old automobile factory. The blossoming program, which helps BioGenerator's portfolio companies to get off the ground, continues to pay dividends within the growing biotech community.

Ambassadors aim to soften rough landing for St. Louis immigrants

In InnovationSTL

6:34 am on Fri, 11.08.13

The St. Louis Mosaic Project is set to hold an orientation for its new ambassadors -- dozens of foreign and native-born volunteers who aim to help make the community a more welcoming place for those from other nations. Participants will be expected to do everything from visiting local restaurants serving international cuisine to having dinner with an immigrant to the area.

Recent Articles

More Articles

Innovation and entrepreneurial activity are on the rise in St. Louis, especially in bioscience, technology and alternative energy. The Beacon's InnovationSTL section focuses on the people who are part of this wave, what they're doing and how this is shaping our future. To many St. Louisans, this wave is not yet visible. InnovationSTL aims to change that. We welcome you to share your knowledge, learn more about this vibrant trend and discuss its impact.

Featured Articles

Regina Carter brings jazz and therapy to Children's Hospital

6:36 am on Mon, 12.09.13

One night, the violinist is taking bows before a standing ovation at Jazz at the Bistro. The next afternoon, some of her audience may have trouble standing, but the kids in the playroom at Children's Hospital were no less appreciative. “Jazz is medicine personified," according to a doctor who brings in the jazz musicians.

Featured Articles

Featured Events:

Upcoming Events

View Full Calendar

More About The Beacon Home