Gov. Jay Nixon denounced a new Senate plan to overhaul Missouri's tax policies Thursday, asserting that a proposed sales tax increase could be especially harmful for seniors and veterans who might not benefit from a corresponding income tax cut.
The Democratic governor voiced his opposition to the Republican-backed plan just a day after it received preliminary approval in the Senate, where supporters touted it as a necessary step to keep pace with recently enacted income tax cuts in Kansas.
The central part of Senate bill would gradually reduce Missouri's individual and corporate income taxes by three-quarters of a percentage point over five years while also deducting half of the business income that gets reported on individuals' tax returns. To offset part of that lost tax revenue, the legislation would gradually raise the state sales tax by one-half cent over the same period.
Asked Thursday about the Senate legislation, Nixon focused on the proposed sales tax increase. He said it could especially affect seniors and veterans who rely on Social Security checks or federal benefits and may not gain much an income tax reduction. He also suggested that the sales tax increase could hurt working-class families purchasing baseball gloves or other items for their children.
"The bottom line is when folks go to the store, they'll be paying more for everything they buy," Nixon said. "That is a tax increase, and I am not for it."
Bill sponsor Sen. Will Kraus, R-Lee's Summit, says the legislation would equal a $450 million annual reduction in state tax revenues once fully implemented. The nonprofit Missouri Budget Project, which analyzes financial issues with an emphasis on their effect on the poor, estimates a $700 million annual cost.
Nixon did not address a question Thursday about whether the state could afford the lost tax revenues. Some Democratic senators have denounced the plan "irresponsible" while predicting it could jeopardize future funding for schools and other government services.
The legislation needs another Senate vote before it can move to the House.
House Speaker Tim Jones said Thursday that although he hasn't reviewed the specifics of the Senate bill, he likes the general concept of reducing income taxes in favor of higher sales taxes.
"It moves us incrementally toward what the majority caucus favors, which is more of the consumption-based taxation," said Jones, R-Eureka.