JEFFERSON CITY, Mo. (AP) – Gov. Jay Nixon indicated Friday that he is likely to veto legislation that would cut Missouri’s income taxes for businesses and individuals, saying he has serious concerns that it could jeopardize funding for essential government services.
The Democratic governor criticized the tax-cut plan just a day after it won final approval from a Republican-led Legislature that touted it as a means of remaining economically competitive in a battle for businesses with Kansas and other bordering states.
The legislation would phase-in a 50 percent deduction over five years for business income reported on individual income tax returns. It also would gradually cut Missouri’s corporate income tax rate nearly in half over and lower the top tax rate for individuals from 6 percent to 5.5 percent over the next decade.
The corporate and individual tax rate reductions would take effect only if annual state revenues continue to grow by at least $100 million over their highest point in the preceding three years.
Legislative researchers have estimated that the measure would reduce Missouri’s potential revenues by about $700 million annually when fully implemented. The nonprofit Missouri Budget Project, which analyzes fiscal issues and has opposed the income tax cut, has estimated the eventual cost at more than $800 million annually. Nixon adopted the higher cost estimate in his remarks Friday.
“Taking more than $800 million literally the equivalent of what you spend on higher education, or literally more than you have for all of corrections or mental health is not the fiscally responsible approach,” Nixon said.
Asked if he would veto the measure, Nixon stopped short of directly saying `yes’ but indicated that was likely.
“At this time, I’m certainly not looking at it with an eye to add it to the structure of Missouri government,” the governor said.
Legislators would need a two-thirds majority in both the House and Senate to override a veto. The House vote for the bill Thursday was six votes shy of that threshold, but there were nine members who did not vote.
The tax cut bill is HB253.
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