As we approach next week’s veto session, several bills are likely to be brought up for an override. The governor’s veto of House Bill 253, the first across-the-board tax cut for Missourians in almost 100 years, has received the most attention. Unfortunately, much of that attention — from the governor’s office and those he has brought on board — has been slanted and misinformed. I sent the following information to fellow legislators, and wanted to share it with Missourians, as well.
Misinformation: HB 253 treats corporations better than people
The personal income tax brings Missouri more than $5.5 billion in revenue, while the corporate tax brings in only $500 million. The impact of a higher percentage cut on corporate income is significantly less on our revenue and more easily affordable. No one believes we could cut the personal income tax at the same rate as we could cut corporate taxes.
Misinformation: HB 253 is designed to help big shots
The governor likes to call the pass-through tax deduction a tax cut for "lobbyists and lawyers." What he doesn’t tell you is that most "mom and pop" businesses are organized in a similar way. That includes almost every electrician, plumber, painter, dry cleaner, local restaurant, local boutique or clothing store, gym, and many, many more businesses.
Misinformation: The Legislature intended to institute a tax on prescription drugs
As part of the Streamline Sales Tax Compact, Missouri had to redefine in statute all of its tax definitions. Those definitions were rewritten by experts in the Department of Revenue and they followed the bill’s progress and even testified in favor of the legislation. A simple failure to remove the words "over the counter" may lead courts to believe Missouri could now tax prescription drugs. That would not take effect until 2015, if it was ever interpreted that way at all. Every member of the Legislature I have talked to is committed to clarifying the language in 2014.
Misinformation: The additional tax cuts if the Marketplace Fairness Act of 2013 passes are retroactive three years and will cost $900 million more than estimated
The Missouri Constitution bans retroactive or retrospective laws, and it was not the intention of the Legislature to make any part of the tax cuts retroactive. I disagree with both the governor’s and attorney general’s reading of the bill, as do many tax experts and lawyers. If the wording needs to be made clearer, we can do that at any time prior to the passage of Marketplace Fairness. It is also generally assumed at this time that the Republican-controlled U.S. House will not pass this act, and certainly not any time soon.
Misinformation: Missouri is a low-tax state
Four of our neighbor states have lower personal income taxes, one of which has no tax. When comparing the top six growth states, Missouri’s personal income tax is second highest.
Misinformation: Missouri is already business-friendly
The governor is fond of quoting one particular survey which says Missouri is business-friendly. Unfortunately, that one is probably the only positive survey he can find. A recent CNBC survey has Missouri at 26th in business environment. A Governing Magazine survey of actual businesses ranks Missouri in 28th place. Neither is an impressive number. We need to do better.
Misinformation: Missouri is doing fine in the border war with Kansas
The truth is we lose much more than we win. And the biggest long-term losses will be businesses that move that we never know about. Small businesses could save as much as 7 percent by moving to Kansas. If your business makes $200,000 a year, you are losing $14,000 right now by staying in Kansas City, MO. Anyone who believes businesses won’t take that into account is fooling themselves.
Misinformation – Lowering taxes will not create job growth and attract businesses
Recently the governor has put out news regarding Express Scripts and AB May. In both cases, DED attracted more jobs by offering lower taxes. The only difference between the governor’s actions and HB 253 is that the governor wants to pick and choose who gets lower taxes, and HB 253 lowers them for all businesses. HB 253 is the fairest way to create economic development.
Misinformation: You can’t be both for HB 253 and for government programs such as education, mental health, and the arts
As with most issues, there is a bottom line difference between opposing sides. That is very true here. Those who oppose HB 253 are comfortable with Missouri continuing to lose taxpayers relative to other states. That will mean higher taxes for those of us who stay. Those who support HB 253 want more Missouri taxpayers, so each of us pays less, but revenues still match our state’s needs. HB 253 supporters do not believe revenues will go down, do not believe it will impact our schools negatively, and do not believe the doom and gloom predictions of our governor. HB 253 supporters look instead to examples of states, like Oklahoma, and the federal government which have lowered taxes and seen an increase in revenues.
Misinformation: The status quo is the way to go
The status quo is underfunding K-12 education by more than $600 million. The status quo has a governor withholding even more funds from education despite a $400 million surplus. The status quo provides incentives for businesses and residents to cross a simple street and move to Kansas, which will continue to reduce, not grow, Missouri revenues. HB 253 gives Missouri a fighting chance to reverse these trends and fully fund our obligations, including education.
Please feel free to contact me 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 573-751-1464, or e-mail at firstname.lastname@example.org.