(JEFFERSON CITY, Mo., AP) — After splintering last year, Missouri’s House Republicans banded together Thursday to pass a pair of tax cut plans with a vote strong enough to suggest that a veto override is within reach if Democratic Gov. Jay Nixon does not sign a tax reduction.
The House passed two versions of a potential income tax cut — one targeted at all businesses; the other affecting individuals and certain categories of businesses.
Every Republican who was present voted for the bills — a stark contrast from last September, when 15 House Republicans broke from the majority to prevent an override of Democratic Gov. Jay Nixon’s veto of an income tax cut.
“What this vote is, is a signal to the governor that he needs to work with us, not against us,” House Speaker Tim Jones said in an interview. “We’re going to be united in the House with the Senate in promoting a tax reduction package this year.”
The House vote came a week after Nixon announced he would be willing to sign a tax cut this year if the legislation complied with several conditions. The governor said the tax cut must be targeted to individuals and should take effect only after schools are fully funded, state revenues have grown by at least $200 million and two of the state’s costliest tax credit programs for developers have been reined in.
The legislation passed by the House meets none of those conditions.
Nixon denounced the legislation as a pair of “fiscally irresponsible experiments that combined would funnel nearly a billion dollars out of our classrooms and other priorities.”
The legislation targeted solely at businesses is projected by legislative researchers to reduce state revenues by up to $347 million annually. The bill containing a tax cut for both individuals and some businesses is estimated to cut state revenues by $704 million annually when fully phased in.
“If we cut taxes for businesses and we cut taxes for individuals, our state will prosper,” said Rep. Andrew Koenig, a Republican from Manchester who is sponsoring the bills.
Democratic Rep. Mike Colona, of St. Louis, said Republicans are foolish if they think that cutting taxes will result in higher state revenues.
“This is voodoo economics. We’ve been here; it doesn’t work,” Colona said.
The House passed both measures with 106 votes — three shy of the two-thirds majority that would be needed for a veto override. But two Republicans were absent. And three House seats that currently are vacant are scheduled to be filled in special elections in August, a month before the Legislature reconvenes to consider veto overrides.
The legislation now goes to the Senate. If senators make changes, the House would have to vote again on the legislation before it could go to Nixon.
Rep. David Wood, one of the 15 Republicans who voted to sustain Nixon’s veto last year, said he voted for this year’s legislation partly just to “move the bill through the process.”
“There are still things I have concerns about,” particularly with the way the individual income tax cut is structured, said Wood, of Versailles.
One of the bills would gradually reduce the individual income tax rate to 5.3 percent from its current 6 percent over seven years. It also would phase in over five years a 50 percent deduction for business income reported on individual tax returns. Those incremental tax cuts would take effect only as long as state revenues rise by at least $150 million.
The other bill would phase in a 50 percent deduction for business income while also gradually reducing the corporate income tax rate to 3.125 percent from its current 6.25 percent over five years. Those incremental tax cuts would continue so long as state income tax revenues remain above their 2012 level. But businesses that pay employees 150 percent of the county’s average wage could claim the full tax cut immediately.