KANSAS CITY, Mo. -- Missouri Gov. Jay Nixon Friday defended his veto of legislation that would cut income taxes for millions of people and thousands of businesses in the Show-Me State. The governor claims the huge tax cut would harm Missouri's credit rating and force local communities to raise taxes.
Nixon is pointing to a downgrade in Kansas' credit rating as being partially the result of similar income tax cuts enacted on the other side of the state line. He believes the same situation could happen in Missouri if this income tax cut becomes law. A drop in credit rating usually means higher interest rates for taxpayers when the state borrows money.
Missouri's proposed tax cut would gradually drop the income tax rate from 6 percent to 5.5 percent and phase in a 25 percent deduction for business income. The tax cuts take effect in 2017, but only if state revenues grow by at least $150 million. Republicans are vowing to override Nixon's veto, but the governor claims the GOP wants to follow Kansas in ending its long history of conservative financial management practices.
"The bottom line is that there are lots of ways to do reasonable appropriate tax reform," Nixon said. "This dangerous experiment, and highlight dangerous when we see additional interest costs that will be paid because of downgrade, what that would mean for Missouri. People should not override the bill. We should get back to the table and get to work."
Supporters of the tax cut say it would help jumpstart Missouri's sluggish economy and includes safeguards to protect current budget funding levels. Republicans say it would provide a boost to small businesses, which hire eight out of 10 Missouri workers.
Gov. Nixon says the tax cuts will primarily benefit lawyers and lobbyists.
Missouri lawmakers are expected to vote on an override of the governor's veto of the tax cut legislation next week.
Republicans think they have the two-thirds majority necessary to prevail.