House approves dismissal of franchise tax

The state House of Representatives on Monday passed House Bill 1619, which would eliminate the franchise tax for all employers. The bill has been passed to the Senate for consideration.

The tax was eliminated in 1999 for corporations with $1 million or less in assets; the new bill calls for a four-year phase out of the tax for all Missouri corporations.

In the first two years, the minimum assets threshold would be increased to $4 million. Complete repeal would take effect in 2011.

Though removal of the tax would hurt state revenues, the Missouri Chamber of Commerce, which helped draft the bill, says that disadvantage would be offset by new investments prompted by the lower tax burden.

“Elimination of this tax could be one of the most significant economic development efforts for Missouri in years,” said Jeff Craver, chamber tax counsel, in a news release.

The tax was established in 1917 and applies to corporations regardless of whether they are franchises.[[In-content Ad]]