More than 60 different tax credits cost the state around $600 million annually.
But the first two bills sent to and signed by Democratic Gov. Jay Nixon increase tax credits. One created a new tax credit for amateur sporting events and the other extended or reinstated several credits benefiting charitable organizations.
The debate on the Senate floor Wednesday over a bill to renew one particular tax credit demonstrated the challenges of trying to eliminate some tax credits while creating or renewing others.
Legislators don't want to lose out on programs that benefit their districts even though they may agree with the general goal of cutting back on tax credits. An example of this dichotomy was on display Wednesday when Democratic Floor Leader Sen. Jolie Justus, D-Kansas City, agreed that tax credits needed to be reined in but introduced an amendment to create a new tax credit program that would benefit her district.
She proposed the amendment, which would create an incentive for investors in small business start-ups in Missouri, during debate over a bill sponsored by Sen. Scott Rupp, R-St. Charles County.
Rupp's bill would extend the New Markets Tax Credit program for another six years. The state tax credits combine with a federal tax credit program of the same name to encourage specialized financial institutions to invest in businesses in low-income areas.
“It’s been hugely successful. They blew through the cap right away,” said Rupp, R-St. Charles County.
The bill also included a few new provisions that Rupp said would improve the performance of the program and ensure the state got a good return on its investment.
Debate over the New Markets program, however, was diverted when Justus introduced her amendment. Justus said she agreed that state tax credits needed to be limited but said the Angel Investment Incentive Act, which would encourage investors to give money to small companies and start-ups in Missouri, was the number one priority for Kansas City.
Justus also said she supported the underlying bill to extend the New Markets program. Sen. John Lamping, R-St. Louis County, criticized the bill as being "crony capitalism" and characterized it as corporate welfare that would create a class of wealthy investors who were dependent on government.
“It’s free money,” he said to Justus during discussion about her amendment and the underlying bill.
“And we give it away all the time,” Justus responded. “I’m not going to be the first one to stand down in this nuclear war.”
Justus was successful in adding the same language to another wide-ranging tax credit bill that passed the Senate on Feb. 26.
Another bill passed by the Senate on Tuesday, which both Lamping and Justus voted against, would eliminate a tax credit for low-income seniors who rent their homes. Justus said the bill being considered on Wednesday was not related to that vote since they are separate programs.
Justus said during debate on the floor Tuesday that she opposed the elimination of that tax credit because it unfairly burdened the poorest Missourians. Even though she said she is against the elimination of that tax credit, Justus said Wednesday that she supported limiting some other tax credits.
“I think you and I agree that we need to rein those in,” Justus said. “But if we as a body are not going to rein those in, then this is an idea that I want to move forward.”
The Senate defeated Justus' amendment and gave preliminary approval to Rupp's bill before adjourning Wednesday night. The bill requires one more affirmative vote from the Senate before moving to the House.
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