JEFFERSON CITY, Mo. (AP) — A trio of measures that could reduce taxes for some businesses won approval Wednesday in the Missouri House, as lawmakers continued pushing to keep pace with recent tax breaks in Kansas and other neighboring states.
One of the bills would cut income taxes for thousands of corporations in Missouri. The other two measures would target tax breaks at particular high-tech companies that policymakers hope to attract to Missouri. All told, the legislation could reduce Missouri revenues by tens of millions of dollars annually.
Throughout the session, lawmakers have cited recent income tax cuts and aggressive business incentives in Kansas as a reason for Missouri to reciprocate with its own tax breaks. Missouri's western rival again appeared to be a motivating factor in Wednesday's House votes.
"I am tired of hearing about Kansas," said Rep. Vicki Englund, a Democrat from St. Louis County who supported the two new business incentive bills.
The House passed legislation, 126-26, creating a tax credit for so-called "angel investors" in high-tech, startup businesses — something that that the Angel Capital Association says already exists in Kansas and about half of all states. The Missouri bill would provide up to $6 million annually of such tax credits beginning in 2014.
The House passed legislation, 128-25, authorizing state and local sales tax breaks for large "data centers" that house computer servers vital to many online businesses. Similar incentives already exist in about a dozen states, including Kansas and many of Missouri's other neighbors. The House plan would waive taxes on the purchase of computers, equipment, materials and utilities used by the data centers.
Both of those incentive bills now go to the Senate, which already has approved the new programs as part of its broader tax policy legislation.
The Republican-led House also gave initial approval Wednesday on a largely partisan voice vote to a bill that would gradually cut the state's corporate income tax rate from the current 6.25 percent to 4.25 percent by 2016. Once fully phased in, the tax cut could reduce Missouri revenues by $123 million annually, according to the University of Missouri's Economic Policy Analysis and Research Center.
The corporate income tax cut is sponsored by Rep. Andrew Koenig, a Republican from St. Louis County who voted against the tax breaks for data centers and startup companies. Koenig described the targeted tax breaks as "manipulating markets and picking winners and losers" but said a general reduction in the corporate tax rate is "equal across the board."
Missouri has about 40,000 corporate income taxpayers, according to figures from the state Department of Revenue.
Yet many small business owners may not benefit from a corporate tax reduction, because their business income is reported on their individual income tax returns, said Brad Jones, the Missouri director of the National Federation of Independent Business.
Page 2 of 2 - Earlier this month, the Missouri Senate passed a sweeping measure that would gradually cut individual and corporate income taxes, raise the state sales tax and make various other tax changes. Different groups have projected that the Senate bill could reduce state revenues by between $477 million and $960 million annually once fully phased in.
Last month, the Senate also passed an overhaul of the state's tax credit programs that would redirect money from developers of low-income housing and historic buildings to businesses focused on high-tech jobs and international trade. That measure was projected to save the state tens of millions of dollars annually.
Like the Senate legislation, Koenig's bill seeks to increase Missouri tax collections from online sales and out-of-state retailers that deliver products to Missouri homes.
Koenig's bill would create a new state income tax deduction of up to $10,000 for people who purchase newly built homes between Aug. 28, 2013, and the end of 2015. That could reduce Missouri revenues by between $20 million and $60 million, according to projections by state budget officials.
An amendment added Wednesday to Koenig's bill by Rep. Paul Curtman, R-Pacific, also could eventually reduce individual income taxes for many Missouri residents by requiring the state's tax brackets to be adjusted annually for inflation. The result is that it people could eventually earn more income before being charged the maximum tax rate.