Nixon vows veto of tax-cut measure

Nixon said in a news release the bill – which includes a 25 percent deduction for business income reported on personal tax returns – would hurt schools and do little to help working families. Data released by the Missouri School Boards Association indicates the bill would reduce state support for K-12 school districts by $223 million a year, according to the release.

“Senate Bill 509 is an unfair, unaffordable and dangerous scheme that would defund our schools, weaken our economy, and destabilize the strong foundation of fiscal discipline that we’ve worked so long and hard to build,” Nixon said in the release.

Springfield Public Schools is urging lawmakers not to override Nixon’s looming veto, estimating the bill could cost the district $6.5 million in annual revenue.

According to the fiscal estimate produced by the legislature, SB 509 would reduce state revenue by more than $620 million annually when fully implemented, though five separate annual increases in state revenue of $150 million would be needed to drop the top tax rate to 5.5 percent. The earliest the top tax rate could fall to 5.5 percent would be fiscal 2022.

The governor said recently a provision in the bill that eliminates the top tax bracket would drop income tax collections by 97 percent and reduce the state’s general revenue budget by $4.8 billion annually with the rate reductions in full effect.

Currently, the roughly 80-year-old bracket system puts the top tax rate at 6 percent for those who earn more than $9,000 a year, and there are a handful of lower rates for those who earn less than $9,000 in wages.

By eliminating the top bracket, people earning between $8,000 and $9,000 a year would pay the top rate of 5.5 percent, and those earning more than $9,000 would pay no income taxes, according to the bill.

“This fiscally irresponsible legislation would permanently undermine support for education and the vital public services that strengthen our economy and support our quality of life, and it cannot become law,” Nixon said in the release.

The Missouri Chamber of Commerce and Industry has called lawmakers to quickly override any veto. In a separate news release issued yesterday, the group dismissed the notion that the bill would be harmful to schools or residents.

“For more than a year now, the governor has been falsely painting this as an education-versus-business issue. That fabrication continued today during the last 15 days as he campaigned against the tax relief. In reality, this is a conservative tax cut that includes provisions to protect our state’s resources for education,” Missouri chamber President and CEO Daniel Mehan said in a news release. “We urge the General Assembly to quickly override this veto.”

The bill, sponsored by Sen. Will Kraus, Rep. Lee’s Summit, would gradually lower the state’s income tax by 0.1 percentage points annually in each year that revenue gates are hit. The reduction is triggered when general revenue exceeds the general revenue from the highest of the three previous years by at least $150 million.

Supporters of the bill, such as Rep. Lincoln Hough, R-Springfield, have said if the governor’s reading of the provision is correct, lawmakers have plenty of time to fix the bill to match its intent. 

Last year, Nixon vetoed a similar tax cutting measure, House Bill 253, and lawmakers failed to secure the 109 votes needed to override the veto.