Representative JIm Neely's Capitol Report
Greetings, friends of the 8th District!
House Gives Final Approval to Tax Reform and Infrastructure Act (HB 2540)
The House this week sent the Senate a comprehensive tax reform and infrastructure plan that would cut the state’s personal and corporate income tax rates and transform Missouri’s tax system to the most competitive in the nation, while also making substantive reforms to generate much-needed funding to repair and improve Missouri’s aging transportation infrastructure.
The sponsor of the bill said he has four goals he wants to accomplish with the legislation:
- To make Missouri one of the top 10 most competitive states in income tax;
- To make Missouri one of the top 10 most competitive states in business tax;
- To develop a long-term, sustainable solution to funding our infrastructure; and
- To accomplish these things in a fiscally responsible way.
The sponsor told his colleagues the bill accomplishes his goals while adding, “Our goal in this is to provide a better tax policy framework for the state of Missouri going forward. This is not a one-year problem or a two-year problem. It is a ten, fifty, and a hundred-year problem. We’re trying to create a system that can be sustainable for 21st century Missouri.”
In an effort to ease the tax burden on Missouri families, the bill would reduce the state’s highest personal income tax rate from 5.9 percent to 5.0 percent. The change would place Missouri in the top 10 states for lowest personal income tax. The bill would also help Missouri’s business climate by cutting the corporate income tax from 6.25 percent to 5.0 percent. This reduction would also put Missouri in the top 10 states for the lowest corporate income tax.
Additionally, the bill would generate much-needed revenues for the state’s roads and bridges. It would put Missouri in line with many other states by indexing vehicle user fees to the cost of inflation. The state’s current vehicle license and registration fees were put in statute in 1984, and have not changed in more than 30 years. The tax reform bill would update fees from their 1984 value to present day value. The increase is a key component to the effort to generate nearly $2 billion in additional funding for transportation infrastructure over the next decade. The idea was recommended by both the 21st Century Missouri Transportation System Task Force and the House Policy Development Caucus.
Additionally, to maintain financial stability to the state tax code, the bill would make a number of other reforms including:
- Joining the Streamlined Sales Tax agreement so that Missouri collects sales tax on online purchases so that Missouri brick and mortar businesses are on equal footing with online competitors;
- Phasing out the federal income tax deduction on state returns for individuals and corporations with over $150,000 in income;
- Reducing waste in state government by consolidating maintenance between certain government agencies;
- Eliminating deductions and closing loopholes; and
- Implementing other necessary reforms that would eliminate government inefficiencies.
The reforms are critical components to keep the bill fiscally responsible and as close to revenue neutral as possible.
A committee amendment added on the House floor would delay implementation of many of the provisions of the bill by a year. Legislators said their goal with the change is to accommodate the current Fiscal Year 2019 budget plan the House and Senate are working to pass.
The Senate, which has sent its own version of tax reform legislation to the House, will now have the remaining weeks of session to act on the bill.
House Bills Moving to the Senate
HB 2117 would remove an antiquated reporting requirement and use of only eye drops for newborn infants based on a 1909 statute. Supporters say the existing statute places one more burden on hospitals and the Department of Health and Senior Services. The state collects, but does not review documentation, nor does the state have need for this information. HB 2117 would offer physicians the opportunity for the best standard of care. It would simply update Missouri statues with fewer regulations and less government.
HB 2129 would require that beginning in school year 2019-20 students in public or charter high schools shall receive 30 minutes of instruction providing information on decisions about organ, eye, and tissue donation before graduation. Supporters say families need information about organ donation and a potential donor's wishes long before they are put in the position of making a donation decision due to the unexpected death of a potential donor. The bill would help ensure more people learn about organ donation.
HB 2336 would specify that a child taken into the custody of the state or a child under the jurisdiction of the juvenile court shall not be reunited with a parent or placed in a home in which a parent or any person residing in the home has been found guilty of sexual trafficking of a child in the first degree. Supporters say the bill would fix something that was missed in the 2014 criminal code revision. It would simply prohibit someone who has been convicted of sex trafficking from getting custody of a child. If the child ends up in a home where a spouse was convicted of such offense, there is usually a backup plan to ensure the child is never left alone with the individual.
HB 1915 would change the penalty provisions for knowingly violating the law relating to the no-call list. Supporters say that the bill would encourage individuals to report violations relating to the no-call list and hopefully lead to a decrease in the number of violations.
Senate Bills Sent Back to the Senate with Changes
SB 573 would allow members of the National Guard or reserve components of the Armed Forces of the United States to deduct such military income from his or her Missouri adjusted gross income to determine such taxpayer's Missouri taxable income. The percentage of such income that may be deducted would be phased in between tax years 2020 and 2024 in 20 percent increments. Supporters say the current deductions do not apply to activated National Guardsmen serving within the state. This bill would provide an extra benefit and show support for the military installations and operations in the state when the federal government is looking at reducing or expanding military missions.
Yours in service,
Representative Jim Neely
Proudly Serving the 8th House District
Clinton, Caldwell, Ray, & Clay Counties
Missouri House of Representatives
573-751-0246
