Columbia Missourian: Tax reform tabled with end of legislative session looming

Calling it a disappointing failure to compromise, Sen. Bill Eigel, R-Weldon Spring, tabled a tax reform bill he was promoting on Monday night, leaving just a slim chance the legislature makes significant tax changes before the session ends on Friday.

Under Eigel’s “compromise” plan, the top income tax rate would be cut to 5.5 percent at the beginning of 2019. Under a tax cut approved in 2014, the rate will continue to drop one-tenth of a percent each year until 2022, when the cut will be 5.5 percent. Under Eigel’s plan, in that same year it would have dropped to 5.1 percent.

The bill Eigel carried is a pared-down version of a once-massive tax reform bill originally proposed by Rep. Elijah Haahr, R-Springfield.

When Eigel brought Haahr’s bill to the Senate floor, it included a provision for a further cut of one-tenth of a percent on the top bracket. That extra cut would only occur if the U.S. Supreme Court overturns its ruling in the 1992 case Quill Corp. v. North Dakota, which barred states from collecting sales tax on companies without a physical presence within the state. The Supreme Court is widely expected to overturn the Quill ruling as soon as June, which could let states collect sales tax on all internet sales.

Eigel argued the additional revenue brought in by online sales taxes would offset the additional cut, as well as funding the Earned Income Tax Credit, which was also included under the condition Quill is overturned.

The Earned Income Tax Credit reduces the amount of tax people who make low incomes are required to pay.

Sen. Jill Schupp, D-St. Louis, proposed an amendment that would eliminate the top-bracket tax cut and make the tax credits effective immediately, rather than being conditional on the Quill ruling.

Eigel said he couldn’t have the tax credits without the tax cut, and noted that any change to the bill that would affect revenue estimates would likely doom it.

Eigel proposed his own amendment to eliminate both of the conditional provisions, which passed. Sen. Jamilah Nasheed, D-St. Louis, told Eigel his bill wasn’t going anywhere without the tax credits included. She said 24,000 households in her district would be impacted by cutting the tax credits.

After speaking with Schupp and Nasheed privately, a frustrated Eigel returned to table the bill.

Before controversy over the Earned Income Tax Credit, Sen. Dave Schatz, R-Sullivan, proposed a substitute bill that would have put a gas tax hike on the ballot to help fund the Missouri Highway Patrol, indirectly freeing up funds for infrastructure. 

Sen. Rob Schaaf, R-St. Joseph, proposed changing Schatz’s bill to reference the “taxation of Missouri’s hard-working citizens,” then proceeded to briefly filibuster before Schatz pulled his proposal.

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