Missouri House votes, again, to cut corporate income taxes

The Missouri House sent a bill repealing the corporate income tax to the Senate on a party-line vote Wednesday, with Republicans saying it will boost economic growth and Democrats calling it a business giveaway.

The bill sponsored by state Rep. Travis Smith of Dora would cut the tax rate, currently 4%, to 3% on Jan. 1 and make another one percentage point cut each year until the tax is eliminated in 2028.

“When you reduce the corporate income tax you are helping workers more than anything else because the corporation is not going to be paying those taxes,” Smith said. “They’re putting it back in improving their facilities and paying wages.”

The corporate income tax is paid by larger companies with many stockholders. A fiscal note for the bill estimates it would reduce state revenues by at least $884 million when fully implemented. The state collected $13.2 billion in general revenue in the fiscal year that ended June 30.

The bill passed on a 100-50 vote with Republicans voting for it and Democrats opposed.

“We are one of the lowest corporate income tax states in the nation,” said state Rep. Joe Adams, a University City Democrat.

Legally, Adams noted, corporations are people with many of the same rights as humans.

“As people they should pay part of the freight for the operation of the government of this state,” Adams said.

Missouri’s corporate income tax for decades was 5%. In 1993, in a bill that increased revenue to pay for education needs, the tax was boosted to 6.25%. The rate was cut to 4% in 2018.

This is the second year in a row that the House has voted to cut the corporate tax. Last year, the House voted to cut the rate in half but the Senate did not go along. A similar bill is awaiting debate on the Senate.

Lawmakers in the past 18 months have cut the top rate on income taxes and excluded Social Security and other retirement income from the state income tax. Those cuts will reduce annual revenue by more than $1 billion.