Republicans Regroup, But Contents Of Future Tax Cut Bill Uncertain

Photo by Nicole Lunger
Republican lawmakers are regrouping after House Bill 253 failed to get the votes needed to overturn Gov. Jay Nixon's veto of it last month in Jefferson City. | Photo by Nicole Lunger

Republicans determined to pass veto-proof income tax reductions next year are meeting this month to consider what aspects of the vetoed House Bill 253 to keep and what to jettison.

One point of general agreement is already emerging from Republican leaders and business organizations: legislators should remove the streamlined sales tax language from the bill, which included unexpected increases in sales taxes on prescription drugs and textbooks that drew widespread opposition during the 2013 session.

“I believe there’s more people who believe we should take that out than not,” said Sen. Will Kraus, R-Lee’s Summit, who guided the legislation through the Senate.

The bill, which failed to get enough votes to override the veto, included reductions in the tax rate for corporate and individual income over 10 years. The tax on corporate income would have dropped to 3.25 percent from 6.25 percent. For individuals, the top rate would have decreased to 5.5 percent from 6 percent, but only if state revenues rose by a minimum of $100 million annually. Another provision created a 50 percent deduction for any business income reported by individuals, gradually introduced over five years.

Republicans discuss strategy

Sen. Will Kraus, R-Lee's Summit | Photo from
Will Kraus | Photo from

Negotiations and discussion on what a new tax cut bill should look like are ongoing within the Republican Party. The sponsor of the primary piece of tax-cut legislation, Rep. T.J. Berry, R-Kearney, said he has meetings set up with other lawmakers and interested parties throughout October.

“There’s a lot of political strategy,” Berry said. “There’s all sorts of things that people think should be done.”

Berry said there’s a possibility that the streamlined sales tax portion could just be removed from the bill, but he emphasized there are still discussions to be had.

Five bills were introduced in the Missouri House in 2012 to enact the Streamlined Sales and Use Tax Agreement. This is part of a multi-state effort to collect sales taxes on purchases made online, primarily by simplifying the sales tax code and reducing administrative expenses for businesses. However, compliance would be voluntary for retailers that don’t have any branches within a particular state.

Representatives of major business lobbying groups in the state, who are closely following tax cut policy, said the streamlined sales tax language caused the biggest stumbling block for the success of the tax cut bill.

“I really believe if streamlined sales tax were not included the override would have succeeded,” said Ray McCarty, president of Associated Industries of Missouri.

McCarty said he’d like to see a simpler version of a tax cut bill that could withstand close scrutiny and have enough support to override a potential gubernatorial veto.

Tracy King, vice president of governmental affairs for the Missouri Chamber of Commerce and Industry, agreed. “I just want to get the issue down to its essentials so we can debate the merits of policy rather than the mistakes in the language,” King said.

The Missouri Chamber, Associated Industries and the National Federation of Independent Businesses in Missouri have not taken an official stance on the streamlined sales tax issue.

Seeking a “simple, stripped-down bill”

Brad Jones, director of Missouri NFIB, said he thinks the size of the bill after the streamlined sales tax agreement was added deterred some legislators.

Rep. T.J. Berry, R-Kearney | Photo from
T.J. Berry | Photo from

“Obviously when you have a bill over 200 pages people really get kind of nervous,” Jones said. “What we’d like to see is a simple, stripped-down bill … I’ve seen legislators vote against something just because of the size.”

According to the Springfield News-Leader, Rep. Lynn Morris, R-Nixa, said after a meeting with 15 other Republicans who voted against the override, that tax policy could be considered in smaller pieces in multiple bills.

Berry said while the bill may be smaller, he didn’t anticipate moving forward with multiple small bills. Kraus said he thought there’d be several bills on tax policy introduced.

“I’m not opposed to multiple avenues,” Kraus said. “At the end of the day we’ve got to decide what the policy is going to be.”

Keeping some of the changes made to the bill during negotiations with Senate Democrats, such as the tax deduction for low-income individuals, may be a part of that, Kraus said.

“We listened to the Democrats in the Senate and I think some of those are important to have,” Kraus said.

Berry said his main focus was getting agreement with House Republicans to ensure an override would be successful but said he’d work with Gov. Jay Nixon if the Democratic governor reached out.

“I’m not planning on him signing anything; I’m not negotiating with the governor’s office,” Berry said. “I will be working to get a bill Republicans can support, and if I have 109 Republicans behind me, the governor can go fly a kite.”

Scott Holste, a spokesperson for Nixon, wrote in an email that the governor would not comment on any specifics of upcoming legislation. “Gov. Nixon has always been clear that changes in this area must meet the criteria that they create jobs, and are affordable to taxpayers,” Holste wrote.

Though Berry said he’d not had communication with the governor’s office on the issue of tax policy, Kraus said there was an increase in communication on the subject since the veto session.

“What’s good is we’re talking about tax rate cuts when it was off the table for years,” he said.

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