The Missouri Senate has given first-round approval to a phased-in tax overhaul designed to help the Show-Me State compete with neighboring Kansas, which recently slashed its tax rates.
Senate Bill 26 would lower state income taxes for individuals and corporations by three-quarters of a percentage point while raising the state sales tax by half a point. Both would be phased in over a five-year period. State Senator Will Kraus (R, Lee’s Summit) says it would result in a revenue loss of around $450 million a year.
“(But) I think we can definitely absorb it within our current growth, and that’s regardless of what we do with tax credit reform or other things that are gonna save our state money," Kraus said.
Kraus repeated the message that Missouri needs to compete with Kansas.
"You've got to look at each state," Kraus said. "I think it (will make) us more competitive across the board, and it (will put) money back into taxpayer's hands, (and let) them go out and hopefully spend that money and create more jobs."
State Senator Paul LeVota (D, Independence) disagrees, saying the bill would gut much-needed state revenues.
“We should be the Show-Me State, not the ‘Me, too’ state," LeVota said. "(Kansas) can’t fund their schools, they’re gonna have trouble, but instead of waiting and seeing the impact of this experiment, we’ve dived in with this bill.”
The bill would also attempt to collect sales taxes on purchases made over the Internet. It needs one more vote by the full Senate before moving over to the Missouri House.
Follow Marshall Griffin on Twitter: @MarshallGReport