JEFFERSON CITY, Mo. – Missouri lawmakers will return to the state Capitol in two weeks to cut the state’s income tax and reauthorize tax credits for farmers.
Governor Mike Parson is calling for a special session of the General Assembly to take up the issue of using the state’s surplus for a tax cut.
The plan would reduce the individual income tax rate from 5.3% to 4.8%, increase the standard deduction by $2,000 and $4,000 for single and joint filers, and simplify the state tax code by eliminating the bottom tax bracket.
“We can afford to give the people of Missouri the largest tax cut in our state’s history, which means money and everyday people’s pockets,” Parson said previously. “If you draw a paycheck, you’re going to benefit from this tax cut.”
According to the proposal, every Missourian would not be taxed on their first $16,000 in earnings. Married joint filers would not be taxed on their first $32,000 in earnings. The changes to the tax code and rate would cost the state an estimated $700 million.
“Every tax-paying Missourian, no matter their background, income, or job description will see a reduction in their tax liability,” Parson said Monday. “This isn’t just something we put together in a week or two, this has been about a year-long project for us trying to figure this out and to see how we are going to do it.”
Parson said that for a married couple making $125,000 annually, they would see an 11% reduction in their tax liability.
This comes after the governor rejected a tax rebate plan passed earlier this year by lawmakers. He said he didn’t like that not everyone in the state would benefit. He vetoed a plan that would have given some Missourians a $500 non-refundable tax credit based on last year’s filing. It was estimated to cost the state up to $500 million.
When Missouri started the new fiscal year, it posted a record surplus of $4.9 billion.
Another part of the game plan is to help one of Missouri’s largest industries: agriculture. The Show Me State is home to 95,000 farms, ranking second in the nation, and third for beef cows.
Part of the call for a special session is to reauthorize tax credits for farmers. Under the legislation passed by lawmakers this year, the tax credits expire in two years. The governor said that’s not enough time to get new projects started using the credits. Parson is asking for a six-year sunset provision.
Parson said there were too many special interests, lobbyists, and people involved who shouldn’t be involved in the legislation passed in the spring. The governor, a farmer himself, said earlier this year to fill up three tractors on the same day cost him $500.
“Unchecked tax and spending habits in Washington D.C. have left Missourians punished by this inflation crisis,” Parson said. “We owe it to our farmers and our ag businesses and to all Missourians to provide relief. Real lasting relief that will actually make a difference both now and in the years to come.”
According to the U.S. Drought Monitor, there have been improvements in southern Missouri. Last month nearly 20 counties were in an extreme drought. As of Thursday, less than 10 counties fell under that category.
The Department of Natural Resources (DNR) provides daily updates on its website along with resources like access to water and hay for farmers.
The governor said he’s already met with both Republicans and Democrats about the plan and said the special session will be a good test to see if lawmakers can get along and move forward.
“My team and I have been working with our colleagues in the General Assembly and agriculture partners to formulate a plan to adequately extend our critical agriculture tax credit programs and pass the largest income tax cut in state history,” he said.
House Minority Leader Crystal Quade (D-Springfield) says the governor’s plan is a short-sighted ploy to use the surplus “as cover for a permanent loss of revenue that will put the Missouri government back into the financial hole it just climbed out of.”
Quade chastised the governor for previously vetoing a $500 million tax rebate (HB 1720) already passed by the state legislature following months of negotiation.
Senate Minority Leader John Rizzo (D-Independence) said on Twitter Monday he will “carefully review his [Parson’s] new proposal to ensure it helps working families & is fiscally responsible.”
Parson’s plan calls for the creation of tax credit programs for retailers of higher ethanol blend fuels and biodiesel, in-state biodiesel producers, establishing or improving urban farm operations, and creating the Specialty Agricultural Crops Act. Tax credits would be extended for meat processing facility improvements, transportation of agricultural goods, and an exemption for certain vehicles from state and local sales and use taxes.
The creation or extension of the aforementioned agriculture programs would last six years, according to the governor.
The special session will start on Tuesday, September 6 at 12 p.m. inside the Missouri Capitol. Parson said the legislation will start in the Senate.
The House chamber is currently undergoing renovations and the floor is stripped down to the wood. Desks, chairs, and other equipment line the halls outside of the lower chamber. When asked, Parson said he has been told the construction should be finished by the end of August.