Cost for Missouri tax cut plan would go mostly to businesses

JEFFERSON CITY, Mo. (AP) - Data from Missouri Gov. Eric Greitens’ administration show businesses would shoulder most of the cost of income tax cuts the Republican is proposing, even factoring in a corporate tax cut he wants.

Greitens is asking lawmakers to cut individual income taxes from 5.9 percent to 5.3 percent for most Missourians, slightly lower than the 5.5 percent that’s already set to be phased in over time. The governor also is proposing an earned income tax credit for low-income workers that he said would essentially eliminate taxes for 380,000 people.

For corporations, Greitens’ plan calls for the tax rate to be cut from 6.25 percent to 4.25 percent.

But Greitens wants the plan to be revenue neutral. To do that, he’s proposing to cut deductions and other tax perks primarily for businesses.

Overall, the plan outlines roughly $279 million in net income tax cuts for individuals, according to estimates from the Department of Revenue. Net taxes on corporations and other businesses would go up an estimated $253 million under Greitens’ plan.

Greitens’ spokesman Parker Briden on Wednesday said some multistate corporations with relatively few employees and little property in the state would face tax hikes. That’s because the governor’s plan would change how those businesses are allowed to calculate to their taxable income.

The change is estimated to bring in about $142 million, the largest of Greitens’ proposed hikes to corporate or business taxes.

“There are certain people that are going to have their taxes increased under this, but we’ve worked really hard to make it really good for most businesses and really reward Missouri businesses,” Briden said.

The state would get another $109 million by ending state deductions for what corporations owe in federal taxes, the data showed, as well as another roughly $77 million by ending discounts for businesses that file withholding and sales taxes on time.

Greitens’ plan so far has gotten a mixed reaction from lawmakers.

Republican Sen. Andrew Koenig, who is pushing a different tax plan, praised several provisions of the governor’s proposal during a Tuesday committee hearing.

But he and others have raised concerns about the recommended changes to the individual income tax cut - which would essentially replace another income tax cut that was passed just years ago by the GOP-led Legislature.

The tax cut passed in 2014 would gradually lower the top tax rate - which applies to most Missourians - by 0.1 percent a year down to 5.5 percent if state revenues grow enough.

While Greitens’ proposed 5.3-percent rate is lower and would take effect faster - in 2019 - it also would be paired with tax hikes, unlike the cuts that are now being phased in.

“I will stand as long as I can stand against a tax increase that comes out of this,” longtime Greitens’ critic Republican Sen. Rob Schaaf said Wednesday on the Senate floor.