States crank out even more tax cuts amid cash surpluses

JEFFERSON CITY, Mo. — Six months after passing what was billed as the largest tax cut in Missouri history, the state House voted Tuesday for an even bigger income tax cut that could return over $1 billion annually to individuals, corporations and retirees.

The Missouri legislation is the latest in a series of aggressive tax reductions that swept across U.S. states last year and have continued into 2023 — even as some warn it might be wise for states to hold on to record large surpluses.

“Wouldn’t it be a good idea for us to all just pause for a year?” Democratic state Rep. Deb Lavender asked rhetorically before her Republican colleagues endorsed the tax cut on a 109-45 party-line vote.

The Missouri legislation still has a ways to go — it needs a second House approval before it can move to the Senate and then to the governor. But several states have already given final approval to tax cuts and rebates in the first few months of year. In some states, those tax breaks have been pushed by Republicans, but in others by Democrats.

In Montana, Republican Gov. Greg Gianforte signed a $1 billion package of bills passed by the GOP-led Legislature that will provide both income and property tax rebates, reduce the top income tax rate and increase income tax credits for lowerincome working families.

In Michigan, Democratic Gov. Gretchen Whitmer signed a bill passed by the Democratic-led Legislature that provides tax relief to retirees and lower-income families.

And in West Virginia, Republican Gov. Jim Justice signed a measure passed by the GOP-led Legislature that reduces the income tax rate while also enlarging an income tax credit to offset vehicle personal property taxes. The tax cut is expected to return more than twothirds of the state’s record $1.1 billion surplus to taxpayers, as opposed to spending it on state programs.