A push is being made in the Missouri General Assembly to match the tax cutting already enacted in Kansas. SB 26, sponsored by Senator Will Kraus (R-Lee’s Summit), would cut the individual income tax rate from 6 percent to 5.25 percent and cut the corporate income tax rate from 6.25 percent to 5.5 percent. Meanwhile, the bill increases the state sales tax. How the various tax changes will affect taxpayer’s total tax bill is hotly debated, as is the bill’s probable effect on the collection of tax revenue by the state of Missouri.
Arguments for a tax cut like SB 26 have been offered by various business groups as well as the Show-Me Institute. The Show-Me Institute believes that tax cuts and reform could spur dramatic economic growth so Missouri could compete with neighboring states like Kansas. Click here for an essay by the Institute. The Missouri Budget Project, however, projects that when fully implemented the tax cut changes proposed by SB 26 could slash state general revenue by nearly $1 billion and thus lead to massive funding cuts in essential state services. For the Budget Project’s analysis, click here.
SB 26 moved quickly through the Missouri Senate but has now slowed down as it is mulled over by the House Ways and Means Committee.