The Missouri House passed legislation aimed at creating incentives to attract new businesses and more jobs to Missouri, according to the official website of Missouri House of Representatives.
The legislation will offer an across-the-board tax cut to corporations, new incentives to businesses in certain fields and a sales tax break to shoppers who buy products made in the United States. An amendment was also added to the bill that would reduce Missouri’s corporate income tax from 6.25 percent to 5.5 percent, according to the House’s website.
According to the Associated Press, had the program been in effect for 2011, it would have shaved nearly $37 million from the $306 million of corporate income taxes during the 2011 fiscal year. The tax cut would be offset by savings generated in the bill through reforms to existing tax incentives and the elimination of underutilized and ineffective programs, according to the House’s website.
Senate Bill 8 was approved by a vote of 98-48 in the House. The supporters said the tax cut could be an effective way to reduce the state’s unemployment rate, which is around 9 percent.
But Missouri Senate President Pro Tem Rob Mayer, R-Dexter, said he is unsure whether it’s the best decision during the current special session, the AP reported.
State Rep. Mary Still, D-Columbia, said she is not in favor of the tax cut.
“We already have one of the lowest corporate taxes in the country,” Still said. “It’s not the right thing to do to create jobs. It’s not a huge chunk of money, but I don’t see any good reason for doing that.”
Still said she believes making more investments in higher education is a better way to create jobs.
MU economics professor Saku Aura said he thinks the across-the-board tax cut is the best policy.
“The tax cut might not have an immediate impact on job creation especially in the current economic recession,” he said. “But in long run, maybe in the next 10 years or 15 years, it is the best policy to boost the economy. It can make Missouri become more competitive.”
Aura said though the Democratic take on the legislation is that a tax cut will cut funds to education, he doesn’t think the tax cut will actually lose much revenue. He said the decrease in corporate income taxes can be funded by other forms of tax increases, such as well-selected cuts in the state’s budget.
“Tax cuts don’t pay for themselves,” Aura said. “There are many other ways to fund the education budget. It is true that higher education is funded by the government, but the revenue fluctuates. You don’t know yet what will happen in the future.”
The House legislation also modified provisions of Missouri tax credit programs in accordance with recommendations made by the Missouri Tax Credit Review Commission Report, according to the report’s website. According to the official report, new tax incentive programs were authorized by the house, including tax credits to attract sporting events, data centers and creating the Compete Missouri Job Training Program.
