The Missouri General Assembly on April 6 gave its approval to Senate Bill 19, which would freeze and then phase out Missouri’s corporate franchise tax during a five-year period.
The franchise-tax cap is one of six legislative priorities
that have been identified by a coalition of state business groups spearheaded by the Missouri Chamber of Commerce and Industry.
The other five priorities are employment law reform, workers’ compensation reform, tort reform, unemployment insurance reform and elimination of the minimum wage escalator.
The bill, sponsored by Sen. Eric Schmitt, R-Glendale, now awaits approval by Gov. Nixon. If signed by Nixon, the bill would cap corporate franchise tax liabilities at the amount of each corporation’s tax liability for the 2010 tax year. The amounts paid by new businesses would be capped at the amount of their corporations’ franchise tax liabilities for each company's first full year in operation. Starting Jan. 1, the tax would be phased out during a five-year period, according to a news release from the Missouri Senate.
The corporate franchise tax is based on a percentage of a company’s assets, the release said, and corporations also pay taxes on their earned income as well as Missouri sales and property taxes.
The bill is designed to make Missouri more attractive to businesses that want to expand in Missouri, Schmitt said in the release, and it may lure businesses to Missouri from other states, such as Illinois, which recently increased taxes on corporations.
“The corporate franchise tax is an outdated tax that is only still imposed in a handful of states,” Schmitt added in the release. “While other states raise taxes on business in an attempt to close their budget gaps, we can set Missouri apart and make it clear that this is a place where businesses can expand and create jobs without being penalized.”[[In-content Ad]]