A far-reaching tax overhaul plan for the state that was first introduced a week and a half ago is gaining momentum. Republican Senator Bill Eigel of Weldon Spring now has a House partner to carry his proposal in the lower chamber.
GOP Representative Travis Fitzwater of Holts Summit has embraced the blueprint which would cut $1.2 billion from a state General Revenue stream that totals $9.4 billion.
The measure would claw back most of the lost money by eliminating numerous exemptions. Fitzwater says it’s a responsible way to bring tax relief to citizens while making needed changes that would otherwise be highly unpopular.
“This isn’t just a haphazard, ‘Let’s cut taxes’, and that’s it without any vision going forward,” said Fitzwater. “But let’s cover a multitude of issues that we all agree are issues in and among themselves, that can’t get done in and of themselves.”
Fitzwater and Eigel contend Republican budget committee chairmen in the House and Senate are receptive to continued discussion over the sweeping tax plan.
Probably the most unpopular stand-alone provision in the proposal is its repeal of the federal income tax deduction which can save Missouri filers up to $9,300. It also eliminates a 2% percent deduction for businesses that pay in the sales taxes they collect in a timely manner.
The proposal further caps all tax credits authorized in any given year to a total of $425 million, and substantially downsizes tax credits developers use to build low income housing.
On the other side of the ledger, the plan hands citizens a deep state income tax deduction from 5.9%-to-4.8% starting in 2019. Representative Fitzwater says it reduces the tax burden while allowing for robust public investment.
“It’s kind of this conservative conglomeration of ideas that allow you to decrease people’s tax rates, while also ensuring that you can spend money on infrastructure. You can put money into the budget from tax credit reform.”
The plan addresses infrastructure by hiking the motor fuel tax by six cents a gallon to take care of roads and bridges.
It also offers a path to an ongoing income tax deduction of 0.1% a year if revenue collections are equal to, or greater than the previous year. Senator Eigel says the income tax could completely disappear over the course of many years.
“Over the long term, and it is a long term,” said Eigel. “In fact, to fully phase it out it would be almost the year 2070. So, we have to go about this in a reasonable, slow, thoughtful manner, which we have. But, yes, over the long term this would eliminate the income tax in the state of Missouri.”
Eigel originally submitted the measure, known as the Missouri Economic Relief Act (MERA), shortly after the pre-filing period for legislation began on December 1st. The upcoming session begins January 3rd.
