Gov. Jay Nixon yesterday vetoed a tax initiative under House Bill 253, drawing the ire of the Missouri Chamber of Commerce and Industry and the Associated Industries of Missouri.
The
bill would have instituted phased-in income tax deductions for businesses and individuals. The act would have cut in half the corporate income tax rate during a10-year period to 3.25 percent from 6.25 percent, and dropped the individual income tax rate to 5.5 percent from 6 percent between 2014 and 2018.
“With a price tag of $800 million, this legislation is an ill-conceived, fiscally irresponsible experiment that would hurt our economy and jeopardize funding for vital public services,” Nixon said in a news release. “Writing a bad check and saying you’ll figure out a way to pay for it later might make sense in Washington, D.C., and some other states, but it’s not how we do things in Missouri.”
Nixon discussed his
veto while traveling the state yesterday, including a 2 p.m. stop at Parkview High School in Springfield.
The governor has raised concerns that a provision of the bill raises taxes on prescription medication. It appears to be this point that drew disappointment from the Missouri chamber and AIM, as both groups pointed to a drafting error on the part of Nixon's administration.
“The Missouri chamber does not believe that Missouri taxpayers should be punished for an error made by Nixon’s Department of Revenue,” Missouri chamber President and CEO Dan Mehan said in a news release. “It is extremely frustrating that one error could cost so much to Missouri taxpayers."
AIM, a business advocacy group, pointed to the financial ramifications of eliminating HB 253. In a news release, AIM President Ray McCarty said the state has collected nearly $700 million more this fiscal year than at the same time last year, and that if this were the first year for the bill to be implemented, taxpayers would have saved roughly $120 million.
"We believe the state can accelerate its fiscal growth by cutting the tax burden for Missouri employers," McCarty said in the release. "The economy also would be stimulated by increased spending since the working poor in Missouri also would get a tax cut right away."
AIM has called on the General Assembly to override the governor's veto.
The nonprofit public policy organization Missouri Budget Project applauded Nixon's move and said the legislature should allow the veto to stand.
"The massive tax cut passed by the legislature would actually undermine our economy, because when businesses decide where to locate or expand, they look for an educated/skilled workforce, efficient transportation system and safe, stable communities," Missouri Budget Project Executive Director Amy Blouin said in a statement. "Missouri is already behind on those counts, reeling from years of budget cuts that have boosted class sizes, jacked up college tuitions, and left our bridges and highways marred with potholes.
"We’re at a point where we really need to invest more in these services, but the tax cut would make us starve them instead."
Springfield Rep. Eric Burlison, who had a hand in crafting the bill by sponsoring HB 149 before it merged with HB 253, said he would work toward overriding the veto in September.
“The governor campaigned on the idea that he supports cutting taxes but now he is using political rhetoric and misleading facts to hide the truth that he has once again changed positions on an issue that is important to all Missourians,” said the Republican Burlison, in a statement. “The governor needs to be reminded that the people of Missouri, not the government, know best how to use their hard-earned dollars.”
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