(Updated Friday, May 18, to reflect change in corporate tax rate)
The Missouri General Assembly has approved significant cuts in income-tax rates for individuals and is expected to do the same for businesses before it adjourns Friday.
But the exact impact on the state’s finances is not quite clear.
State Rep. Elijah Haahr, a Republican from Springfield, is chief sponsor of the bill that drops the individual income-tax rate from 5.9 percent to 5.1 percent over several years. The first rate cut goes into effect next year.
Haahr told House members Thursday that the impact will be “revenue neutral’’ because of other tax changes, most notably by reducing the allowed deductibility of federal income taxes.
But Rep. Jon Carpenter, a Democrat from Kansas City, said he feared the financial impact on the state’s budget could be significant if Haahr’s estimate is wrong.
Democrats pointed to differing projections from state agencies and outside fiscal groups.
Within seconds of the bill’s passage, by a vote of 101-40, Haahr had posted on Twitter that it was “the largest personal tax cut in Missouri history.”
The tax cut bill now goes to Gov. Eric Greitens.
Earlier Thursday, the House approved a bill that would reduce the state’s corporate income tax rate to 3.9 percent, from the current 6.25 percent. The Senate earlier had passed the bill.
But on Friday, the House approved a revised bill that lowers the corporate rate to 4 percent. A conference committee had determined late Thursday that the earlier version would cost the state more income than backers had originally believed. Backers blamed the state Department of Revenue for failing to alert them earlier to the initial faulty figures.
The revised corporate-tax cut bill now goes to the governor.
Right-to-work referendum moved to August
As expected, Republicans who control both chambers have succeeded in getting legislative approval to move a union-backed referendum on the state’s right-to-work law to August. The GOP believes that will be a lower turnout election and could make it easier to protect the right-to-work law that passed last year.
The measure is in limbo until the referendum, known as Proposition A, is held. Union backers had sought to hold the referendum in November, which could have helped Democratic candidates, notably U.S. Sen. Claire McCaskill.
Under right to work, unions and employers would be barred from requiring all workers within a bargaining unit to pay dues or fees.
Rep. Holly Rehder, R-Sikeston, supports the August vote as a way to get the right-to-work law in place.
“I’m convinced that a great deal of business investment has been frozen in this fight,” she said. “I think we need certainty for our businesses, and moving this election to the earliest election is the right thing to do, so that our business investment that’s on the sidelines can make up their mind.”
Opponents argued that moving the date betrays the 310,000 citizens who signed petitions seeking a referendum vote in November.
“From the beginning, Eric Greitens has used his dark money to try to confuse voters over this issue,” said Minority Floor Leader Gail McCann Beatty, D-Kansas City. “But Proposition A is designed to do only one thing – drive down wages for Missouri families by making it harder for workers to effectively negotiate with their employers.”
More restrictions on public-employee unions
The House has also given final approval to a wide-ranging labor bill that includes the so-called “paycheck protection” proposal. It will require public-employee unions to get permission from workers every year before withholding dues or spending them on political campaigns.
The bill also limits contracts to three years and would bar the right of public sector employees to go on strike.
The Senate approved the bill late Wednesday. It now goes to the governor.
Bill allows all state workers to be “at will’’ employees
The General Assembly has voted to remove employment protections for some state workers, and repeal the state’s “merit system.” The result would make state workers “at will’’ employees.
The official bill summary says the state’s roughly 57,000 workers will be “serving at the pleasure of their respective appointing authorities.”
Rep. Curtis Trent, a Republican from Springfield and the bill’s handler in the House, said the change would make state government more like private businesses. He said the change was fairer to taxpayers and also would make it easier to give raises to some state workers.
But Rep. Peter Merideth, a Democrat from St. Louis, said he was shocked. Merideth contended that the bill would allow state officials to fire and replace thousands of rank-and-file workers routinely after elections, when political power shifted.
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