The Associated Press
JEFFERSON CITY, Mo. — Over Democratic objections, Missouri House Republicans are quickly advancing a proposed $1 billion tax cut to be financed with federal economic stimulus dollars.
The Republican-led Tax Reform Committee endorsed legislation Monday authorizing the tax cut. It’s expected to be debated by the full chamber on Wednesday.
Democrats argued unsuccessfully to GOP colleagues that the tax break was unconstitutionally added to a Senate-passed bill that previously dealt only with a tax credit for donations to caretakers of the developmentally disabled.
But Republican leaders defended both the process and the purpose of using federal stimulus money for a tax break.
“I think Missourians are going to be excited about this,” said Rep. Joe Smith, R-St. Charles, chairman of the Tax Reform Committee.
House Republican leaders announced the proposed tax break last Thursday after many members of the caucus rebelled against a plan previously endorsed by the House Budget Committee to spend the federal stimulus money on scores of projects across the state.
At issue is Missouri’s roughly $2 billion in flexible stimulus funds known as “budget stabilization” dollars.
The House GOP plan would reduce the state income tax rate by one-half of a percentage point in 2009 and 2010. House Republicans estimate that would result in about $500 million in lost tax revenues each year, though legislative staff have not completed an official financial projection.
Rep. Jeanette Mott Oxford, citing rough Revenue Department estimates, said the tax break would result in a $45 savings for someone with a taxable income of $9,000. A person’s taxable income is calculated after deductions are made to a person’s adjusted gross income.
Someone with $20,000 in taxable income would save about $100 annually under the proposed Republican tax break; those with $50,000 in taxable income would save $250; and those with $100,000 in taxable income would save about $500, according to the Revenue Department estimates.
“The majority of the tax savings in this proposal would go to the richest fifth of Missourians basically,” said Oxford, D-St. Louis.
Speaking later to reporters, House Majority Leader Steven Tilley rejected Democratic assertions that Republicans were supporting a tax break for the rich.
“It’s a tax cut for people who work and pay taxes,” said Tilley, R-Perryville.
The Tax Reform Committee added the tax break to a Senate-passed bill creating a tax credit for donations to entities that provide care for the developmentally disabled. Democrats asserted that in changing the original title of the bill, Republicans were going beyond the constitutionally allowed legislative changes.
While the Tax Reform Committee met, Democrats also walked out in protest from the House Rules Committee.
House Speaker Ron Richard, R-Joplin, had assigned the Rules Committee a new bill spending money from the stimulus package on various projects and transferring $1 billion of “budget stabilization” money to general revenues to make up for $1 billion tax cut.
Democrats asserted unsuccessfully that House rules required the bill to be sent to the House Budget Committee instead of the Rules Committee.
After Democrats left, Republicans deleted the section transferring money to make up for the tax break. Speaker Pro Tem Bryan Pratt, R-Blue Springs, said the section wasn’t necessary for the tax break to occur.
Republicans on the Rules Committee also deleted proposed federal stimulus dollars for a University of Missouri-Columbia cancer treatment center and instead directed the dollars to maintenance at other college campuses.
The move was a retribution against Rep. Stephen Webber, of Columbia, one of the Democrats who walked out of the committee.
