MACON — Kicking off a statewide tax tour on Monday, Gov. Eric Greitens told factory workers in Macon that the state budget “is your money” and that his “common sense” plan would roll back taxes for 97 percent of residents, close tax loopholes and attract businesses to the state.
"You talk to farmers, you talk to ranchers, you talk to people who are trying to get by, and they tell you over and over again, 'Get the government off of my back,'" he said.
The governor wants to reduce the corporate tax rate from 6.25 percent to 4.25 percent, making Missouri’s corporate tax rate the second-lowest among states that have a corporate tax. It would cut the top income bracket rate from 5.9 percent to 5.3 percent.
Greitens proposed eliminating state taxes for 380,000 low-income Missouri workers via a state tax credit. He also noted his budget plan protects public safety, K-12 education and programs for vulnerable children.
To make the cuts revenue-neutral, Greitens has proposed the elimination of several tax breaks such as the timely-filing discount, which gives tax discounts to businesses that file their state taxes on time. Another tax break that he proposes ending is the use of state money to match a $140 million federal low-income housing tax credit.
With several other tax bills floating around the Capitol, it is uncertain which lawmaker or lawmakers will carry the water for Greit- ens’ tax proposal, as the governor will need help and support from the Missouri General Assembly.
In Jefferson City on Monday, several lawmakers expressed support for the governor’s plan, but others said they are skeptical of some of the provisions that would be made and question whether the plan would be “revenue-neutral.” One Republican lawmaker criticized the plan for the way it would, in part, replace tax cuts that already were passed in previous legislation and are scheduled to take effect over the next several years.
The governor’s office and the state Department of Revenue did not release specific details on the total costs of the individual provisions in Greitens’ proposal to show how it would be revenue neutral.
Budget Chair Scott Fitzpatrick, R-Shell Knob, said he expects some revisions to be made, but he generally supports the governor’s plan.
“The package they put together is good in that it (focuses) the benefits on young Missouri taxpayers and tries to create the biggest incentive for businesses to locate in Missouri versus doing business outside the state,” Fitzpatrick said.
He said he believes lawmakers will give Greitens’ plan “a lot of consideration.”
“I don’t anticipate that that plan will in of itself become law unchanged,” Fitzpatrick said. “I think that ideas from legislators will become part of whatever package gets passed.”
Also in support, Sen. Bill Eigel, R-Weldon Spring, said he is open to incorporating some of the aspects of the governor’s proposal into the existing bills, including his own plan, SB 617.
“If there is an opportunity to lower the tax burden even further than what we have done so far, then we will absolutely work to incorporate several aspects of the governor’s bill,” Eigel said. “As long as we’re cutting taxes, I think the governor is going to find myself and others as ready allies.”
Eigel expressed optimism about the governor’s plan being “revenue-neutral.”
“We want it to be revenue-neutral so that it doesn’t create a burden for our short-term annual budget,” he said, “but over the long term, it can cut down on some of the tax burdens that fall on the shoulders of Missourians.”
Sen. Andrew Koenig, R-Manchester, sponsored SB 611, which if passed would cut the corporate tax rate by 2 percent. It’s estimated that by fiscal year 2020, the total state revenue and general revenue would be cut by about $88.4 million with this tax cut.
Koenig said he supports several provisions in Greitens’ plan, like cutting income tax and the corporate tax rate.
But Koenig believes Greitens is ignoring the 2014 tax cut that began taking effect Jan. 1, through a Senate bill that will reduce income taxes over a multi-year period.
“He pretends that SB 509 that we passed in 2014 didn’t happen, and (Greitens’ plan) basically eliminates that,” Koenig said. “In my opinion, I believe it’s a tax increase, because if you don’t allow SB 509 to take place, or fully get implemented, and you delete that from our law, then it’s not a revenue-neutral bill.”
Koenig said he supports many of the governor’s provisions, but wants to make these changes “outside of what we already passed.”
When asked if he thought Greitens’ proposal would supersede other proposed legislation, Koenig said he’s “going to fight to make sure that doesn’t happen.”
House Minority Leader Gail McCann-Beatty, D-Kansas City, was critical of the proposal in a statement released on Monday, in which she said that Greitens’ tax reform proposal “would only serve to make the state’s financial crisis far worse than it already is.”
“The governor promises to cut taxes for nearly all Missourians but fails to mention that for most people those modest breaks will be wiped out by tax increases elsewhere in his plan,” McCann-Beatty said in the statement. “And his claim that somehow his plan will be revenue neutral should be viewed with a great deal of skepticism.”
Amy Blouin, executive director of the Missouri Budget Project, addressed the tax plan in a statement released Monday, saying that the plan provides positive provisions for Missourians. The Missouri Budget Project is a nonprofit organization that provides analysis of public policy in the state.
“As the legislature faces cutting another $240 million from the budget this year, it’s critical that we address our tax policy recognizing the structural tax and budget problems we’ve created in Missouri,” Blouin said in the statement.
Blouin said the Missouri Budget Project is looking forward to working with lawmakers and the governor to create a tax reform bill that “truly benefits hard-working Missourians.”
The governor’s office released a statement from several regional chambers of commerce and organizations in the state that expressed their support for the tax reform proposal.
Many of those who attended the speech in Macon were equally supportive.
David Leath has worked at the factory for almost 40 years.
“For working people (Greitens) wants to cut taxes — there’s nothing wrong with that,” Leath said. David and his wife, Wanda, have been married for 43 years, and are Macon natives.
“David and I don’t have any dependents at home anymore,” Wanda said. She said that puts them in a position with fewer deductions, so “we’re looking for maybe a little bit of relief.”
Wanda is a front-office manager at Midwest Bone and Joint, an orthopedic doctor’s office in town. She said she has worked there for about 14 years, and she and David are considering retiring in the next five years.
Fred Siebert, a retired maintenance manager who worked in the manufacturing industry said that providing quality jobs for Americans ultimately has to do with “human dignity.”
“The government doesn’t create any wealth. None. Zero,” Siebert said.
Siebert said that the best way to lift Missourians out of poverty is to attract manufacturing jobs where people have a wage and benefits that allow them to escape poverty.
Reporters Grigor Atanesian, Kathryn Hardison, Annika Merrilees, Suman Naishadham, Joe Siess and Kaitlin Washburn contributed to this report.
Supervising editors are Dylan Jackson and Mark Horvit.