JEFFERSON CITY, Mo. — A Missouri lawmaker wants to lower the state’s income tax rate. The cut would be the largest in the state’s history.
The Republican senator sponsoring the legislation wants to lower the income tax by half of one percent, which will cost the state millions, but he said the state has enough money for the cut.
“I don’t think there is any better time to put money back in people’s pockets than right now,” Sen. Lincoln Hough, R-Springfield, said. “I think this is something people see that the government says, look, we understand that it’s been tough, it’s been tough on everyone.”
Hough is sponsoring Senate Bill 627, which he said would give more money to Missourians.
“I don’t think I’ve ever met anyone who looked at their paystub and said, you know what, I wish I would have sent more money to the government, I wish the federal government had taken more of my salary, I wish the state government would have taken more of my salary,” Hough said.
His idea is to lower the state’s income tax from an expected 5.3% to 4.8% by 2022.
“I think the crux of this tax cut consideration is that if you give people this money back to their checking accounts, they are going to spend it at home,” Hough said. “People look at their paystubs and I think they could say thank you for actually understanding what we are going through.”
He said this would cost the state around $500 million a year, but due to the pandemic, the state continues to receive more money from the federal government.
“Right now, the state is sitting on $1.7 billion worth of general revenue that is sitting in the bank,” Hough said. “We have a $1.9 trillion bill that’s being discussed in Washington D.C. right now, that has literally billions of dollars of state aid.”
Hough said it’s because of this pandemic that he thinks this is the perfect time to give money back to Missourians.
“We all know that this last year has been incredibly tough and I think this is something that can help every individual in this state and it will help the businesses in our communities,” Hough said.
Gov. Mike Parson said the state needs to be careful with its money.
“I think we’ve still got a ways to go and I wouldn’t say by any means we’re flushed because I don’t think we know what’s going to happen in the next couple of years down the road,” Parson said Thursday. “I think the one thing you have to remember, is there was two income tax years in the same year.”
Hough said there’s no sunset in his bill, meaning unless lawmakers passed new legislation increasing the income tax, it would remain at 4.8% for years to come.
“I don’t want to give something back to an individual and then a few years later or however long, say, oh now we need to start collecting that again,” Hough said. “I think these are the kind of decisions that are made that bring people to a state.”
Across the aisle, Senate Minority Leader John Rizzo, D-Kansas City, said the tax cut should only go to people in need.
“I think if you’re providing relief to the regular Missourian, that works a 9-to-5 job and barely making ends meet, I think that’s something we can talk about right now,” he said.
Rizzo said there are other things in the state those tax dollars could go towards.
“We have pressing issues with infrastructure, transportation, and a lot of places that we could spend the tax dollars in the state for the greater good,” Rizzo said.
Hough said this historic tax cut could bring more people and sales tax money to the state.
“We would be the lowest income tax state of all our surrounding neighbors except Tennessee,” Hough said. “It would be just another thing that I think Missouri could tout as a good reason to call Missouri home.”
Missouri’s neighboring states like Kentucky and Oklahoma have a 5% rate, while Illinois is at 4.95%, Iowa at 8.53%, 5.9% in Arkansas and Kansas with 6.84%.
The last time lawmakers voted and passed an income tax cut was in 2018, when the rate was 5.9% before the reduction.
The bill was proposed this past week and has not been heard in front of a committee yet.