A vote is expected on a massive tax overhaul bill Wednesday. The measure would decrease both corporate and personal income tax rates in phases over the next 10 years.
Opposing Democrats filibustered the bill for several hours Tuesday night. Sen. Jolie Justus, D-Jackson County, said Republicans threatened the Democrats into ending the filibuster.
"The message that we received was that if we did not allow this to come through to a vote eventually, that many of the priorities that we have been trying to defend over the last few months would be forced to a vote...photo ID was the one that was brought up front and center," Justus said.
The "photo ID" bill would require Missouri voters to have a government-issued photo ID.
Sen. Will Kraus, R-Lee's Summit, said he was unaware of a forceful message toward Democrats.
"All I can tell you is I know (the photo ID bill) was taken in from the chair of the Committee, so it was put on the calendar," Kraus said.
The tax overhaul bill is very similar to a bill that had previously passed the Senate, but was never passed with amendments made by the Missouri House. The main difference in the new bill is the removal of a provision to increase the state sales tax.
The current bill phases in a 50% business income deduction over the next five years. It would also potentially reduce the individual income tax rate by .5% in increments over the next 10 years. The bill requires certain triggers to be achieved before each phase of the reduction in the state income tax rate can take place.
Every year, state government would look at the highest yearly revenue earnings of the past 3 years. If the state's revenue in the current year is not $100 million more than the previous high, the deduction will be delayed that until the year that benchmark is reached.
Several Democratic Senators expressed concern that the tax overhaul proposal is an attempt to follow a series of corporate tax cuts made in Kansas.
"I want this to be the Show Me state, not the Me Too state," Sen. Paul Levotta, D-Independence, said.
Kraus said the proposed tax cut is an effort to make Missouri more competitive with Kansas in attracting businesses to the state.
Senate President Pro Tem Tom Dempsey, R-St. Charles, said the measure is far milder than the tax cuts in Kansas.
"It is a smaller tax cut, it is a longer phase in, it has a protection in it that if the revenue is not increasing then the next phase doesn't go in" Dempsey said. "So it's not the same as Kansas' tax cut plan, so don't say that it is."
Justice said Kansas is offsetting loses in income tax revenue with an increased sales tax. Justus argues that Missouri needs to me more careful when raising taxes than Kansas because of the Hancock Amendment to the state Constitution, which prohibits any tax increase without a vote of the people.
"If we mess up, and we have to backtrack, we can't do that in this legislature," Justus said.
Kraus argued that the trigger would protect the state from losing money because the mandatory $100 million increases in general revenue required for each phase would add up to $1 billion over 10 years. The individual income tax rate would be cut by an additional .5% under the bill if the federal government passes the Marketplace Fairness Act, which would allow states to collect a sales tax on Internet purchases in Missouri from out-of-state vendors.The bill also would potentially reduce the corporate income tax rate by 3% in phases over the next ten years. This provision also includes the mandatory revenue increase of $100 million over the highest yearly revenue collection during the past 3 years.
The bill includes a tax amnesty provision that would reduce the taxes owed for people who owe back taxes. The measure would create a window of time for offenders to pay the original tax amount and free themselves of any late penalties.
Republican Senators said this provision was a compromise with Democrats, so Gov. Jay Nixon would give the bill more consideration if it got to his desk.
"We're going to end up voting for this bill that has some things that we would just as soon not do, but only in order to get some things we would like to have," Sen. Rob Schaaf, R-St. Joseph, said. "And the net effect is we're going to save Missourians money."
Democratic Senators expressed concern that they had to vote on a 311 page bill without a fiscal note in one day.
"That's as irresponsible as it is alarming," LeVotta said.
Rep. Sen. John Lamping retorted that they had actually already seen the essence of the bill in it's previous form.
"This is really just a watered down version of Senate Bill 26, which already passed this body" Lamping said.
The bill is expected to move through a Fiscal Oversight Committee hearing and be back on the Senate floor Wednesday.
Sen. Jolie Justus said she believes Nixon will veto the bill if it passes the Missouri legislature. Kraus said he believes the legislature has the necessary votes to override a potential veto