Debunking the Myths about Missouri’s Tax Cut

After remaining silent throughout the legislative process, Governor Nixon has now come out in opposition to Senate Bill 509 & 496, which provides a much-needed tax cut for Missouri’s families and businesses. The Governor’s overblown concerns about the bill are merely meant to distract from his refusal to sign legislation that returns more money to hardworking individuals and entrepreneurs in our state.

This legislation would cut the top income tax rate from 6% to 5.5% over a period of years, depending on increases to general revenue. It also would phase in a 25% tax exemption for Missouri business income in 5% increments. For low-income Missourians who make $20,000 or less, the bill would increase the personal income tax exemption from $2,100 to $2,600. This legislation would also require that individual income tax brackets be adjusted annually for increases in inflation.

The Governor’s claim that SB 509 & 496 would eliminate income taxes on individuals making over $9,000 a year is based on a very strained interpretation of the bill that takes a line entirely out of context.

Former Missouri Supreme Court Judge Ray Price believes that the courts would find that the 5.5% tax rate applied to all income over $8,000 (as adjusted for the Consumer Price Index) after the tax reductions took effect. There is legal precedent that taxation statutes should be read as a whole, and they are to be construed reasonably and in line with the legislature’s intent.

The language in this chapter of law clearly states that it imposes a tax on the “taxable income of every resident.” The bill also specifies that the top income tax rate shall not fall below 5.5%. The legislature’s intent is clear, and the Governor is ignoring legal tradition by trying to reinterpret the bill based on one line.

The Governor has spread misinformation about the amount of money schools would lose if this tax cut was implemented. To preserve the state’s funding levels, SB 509 & 496 requires that revenues increase by at least $150 million each year before the next phase of the tax cut takes effect. These benchmarks ensure that state revenues would not dramatically plummet. When the Governor released his estimates on how much revenue the bill would cost schools, he failed to include the growth triggers in his analysis.

When the economic growth required by the revenue safeguards is accounted for, Rockwood School District would receive an additional $1,092,071 after SB 509 & 496 was fully implemented, and Parkway School District would see a $37,020 increase.

Despite these numbers games, your Republican-led legislature remains committed to Missouri’s future economic growth. Lowering Missouri’s tax rates will relieve families’ tax burdens, attract businesses and jobs to our state, and give companies the capital they need to grow and thrive.

I will continue to support SB 509 & 496 because I recognize that our state’s economic future hinges on Missourians being able to save, spend, and invest their money as they see fit.