For Immediate Release: September 1, 2022
Contact: Traci Gleason
“There are tangible ways that policymakers can provide real tax relief that helps struggling families make ends meet,” said Amy Blouin, President & CEO of Missouri Budget Project. “All too often tax proposals have focused on policies that provide giveaways to the very wealthiest, and little to nothing to those having the hardest time making ends meet.”
MBP’s plan would reduce the top rate of income tax from the current 5.3% to 4.8%, eliminate the business income deduction, otherwise known as the “LLC Loophole,” and strengthen Missouri’s Working Families and Circuit Breaker tax credits to ensure that relief reaches every Missourian.
“Though well-intentioned, about one-third of Missourians would have seen no tax change under the Governor’s plan, including many older Missourians living on fixed incomes and low wages families with children – those who need relief the most,” said Blouin. “By improving two state tax credits, our plan would make sure that every Missourian sees tax savings – a goal expressed by Governor Parson and many legislative leaders.”
The elimination of a flawed tax loophole helps offset the cost of the income tax reduction and tax credit improvements. The LLC loophole was a component of the failed Kansas tax package enacted in 2012, and it was later repealed by the Kansas legislature. While the LLC exemption likely resulted in the growth of registered LLCs, it did not spur economic or job growth. Tax analysts across the political spectrum agree that this provision does nothing to stimulate the economy, but simply encourages tax avoidance by giving certain businesses an unfair tax advantage.
As a result of a mechanism to offset the cost of the tax package, MBP’s plan would cost $586 million a year, compared to the more than $950 million price tag of the Governor’s plan.
“Missouri can’t afford to enact a failed tax experiment like what devastated Kansas,” said Blouin. Under then-Kansas Governor Sam Brownback’s policies, a budget surplus became a deficit, lawmakers had to make repeated and drastic cuts to state services, and the state’s economy suffered. After years of budget crises, that state’s Republican legislature reversed course and repealed most of the tax cuts.
“Because of the Hancock amendment, Missouri policymakers can’t reverse course like Kansas legislators did,” continued Blouin. “By eliminating a flawed and unfair tax loophole, we’ve crafted a policy that helps Missouri avoid a potential budget bomb.”
Senior advocates praised the addition of the circuit breaker property tax credit so that older Missourians left out of other proposals would see benefit.
“Strengthening the circuit breaker tax credit brings relief to thousands of older adults struggling to stay in their homes when property taxes soar,” said Jay Hardenbrook, Advocacy Director for AARP Missouri.
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