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Jun 28

Missouri’s Upcoming Veto Session and The Tax Impact on You

By Mike Ferguson

(St. Charles, MO) – It’s a marquee matchup: Legislative Republicans with a huge numerical advantage versus a Democratic Governor who won reelection just last year by a double-digit margin.

In other words, it’s the political equivalent of a heavyweight fight and it will likely decide if there are changes to the way the state government taxes your family and your business.

The annual veto session gets underway in September and both sides are gearing up for it now, waging public relations campaigns on at least one key issue: Governor Jay Nixon’s veto of the Republicans’ plan that would make sweeping changes to the state tax system.

The plan calls for reductions over time to the personal income and business income taxes while shifting dependence more to sales taxes. Nixon, in his veto message, called that approach “…an ill-conceived, fiscally irresponsible experiment that would inject far-reaching uncertainty into our economy, undermine our state’s fiscal health and jeopardize basic funding for education and vital public services.”

Legislative Republicans haven’t yet decided which vetoes they will attempt to override yet. They’ll make those decisions at a retreat in August although several key lawmakers are not being shy when talking about the likelihood of taking on the tax bill veto.

In an earlier interview for the Missouri Watchdog, House Speaker Tim Jones says the bill (formally known as HB 253) is “…in our philosophical wheelhouse…” and remains a priority for the GOP.

In a new “Missouri Viewpoints”, Republican State Representative Paul Curtman makes his case for the plan, saying the changes are both a long time coming and needed to make the state more economically competitive.

MWSnap010“I wouldn’t call it an experiment. I would say that we’re risking not doing anything. We [the Legislature] haven’t sent any serious tax reform to the Governor’s desk ever, really, and our current tax brackets were instituted in 1931.

“If you make nine thousand dollars [annually] in Missouri, you’re in the highest income tax bracket. But, unfortunately, if you only make nine thousand dollars you probably also qualify for a lot of government assistance. Because you’re in the highest tax bracket, our state is also going to take six percent of your income.

“So, this would have made a particular adjustment which would have lowered the income tax rate for those people from six percent to five and a half percent over the course of ten years and that would have been a good help to them.”

Curtman also likes the plan’s easing up on small business owners, especially those who report their business income on their personal tax returns. Some tax deductions are increased in the bill along with a gradual decrease of the income tax rate.

Democratic State Senator Scott Sifton says he’s open to reforms but, aside from the philosophical debates, thinks this plan should stay off the books because of language in it that actually raise some taxes.

MWSnap007Among the problems is language that would result in a tax increase on prescription medicines. Some estimates say that would have an impact of about $200 million mostly on Missouri’s senior citizens.

Republicans admit that is in the bill and both sides acknowledge that it’s an error that was not meant to be included. Still, bills cannot be amended during the veto session. It’s an up-or-down vote on what Nixon rejected. Republican leaders have vowed to correct the problem next year if the reforms are enacted with a veto override.

Sifton doesn’t like that uncertainty.

“I’m tremendously uncomfortable about passing a massive sales tax increase into law on the assumption that we can get something done next year.

“The reality is, and we’ve seen this in Jefferson City in recent years particularly in the Senate, this system wasn’t designed to make it easy to pass legislation…even matters of broad consensus can be very, very difficult to get through the process.  So I’d much rather see the veto be sustained and come back next year and talk about a tax policy adjustment that doesn’t include a sales tax increase for seniors who can’t afford it and, frankly, isn’t going to badly undermine our ability to fund education for the next ten years.”

A successful veto override requires 109 votes in the House and 23 in the Senate. There are more Republicans that that in both chambers. Still, Sifton is holding out hope that some Republicans break rank and agree to take another swing at tax reform next year.

“The fact is governing parties are not monolithic.

“We have routinely seen bills passed out of the house, not with 109 votes, but with more like 90 votes… There are folks in the majority and in the minority who are not going to vote the party line just because it’s the party line.”

While disagreements among Republicans have jettisoned legislation in recent years, Representative Curtman doesn’t see that happening in September.

“We’re pretty united. We have great communication. We’ve got good leadership that keeps people informed…we’re a pretty united group of people that get along very well. We communicate and we understand each other.”

On the web:

Gov. Jay Nixon’s veto of HB 253 (tax reform bill): http://governor.mo.gov/newsroom/pdf/2013/HB253veto.pdf

Missouri Watchdog article referenced above: http://watchdog.org/90086/missouri-income-tax-cut-battle-looms-in-veto-session/

Representative Paul Curtman (R): http://www.paulcurtman.com/#!home/mainPage

Senator Scott Sifton (D):  http://scottsifton.com/

Permanent link to this article: http://missouriviewpoints.com/missouris-upcoming-veto-session-and-the-tax-impact-on-you/