Republicans in the Missouri Legislature, having performed their annual tax-cut pageant for extremist political donors, can now relax and wait for Gov. Jay Nixon to take them off the hook.
There may be a few members of the GOP who actually believe the fairy tale that cutting taxes by anywhere from $620 million to $800 million a year will plant magic beans that make the economy grow by more than that amount. We’d like to think that most of them are not simpletons. They’ve seen the disaster that befell Kansas when it climbed the beanstalk. They realize that if a low tax burden were all it took to boost a state’s economy, Missouri would be thriving.
The state already seriously underfunds education, infrastructure and social services. Missourians cannot afford Senate Bill 509, not unless they yearn to live in Mississippi North.
It would cut the individual income tax rate — everyone earning $9,000 or more pays the same 6 percent — to 5.5 percent in five years. A 25 percent deduction would be phased in over five years for business owners who “pass through” business income as personal income.
We’re not talking about just mom-and-pop operations. About 94 percent of all U.S. corporations are organized as pass-through entities — subchapter S corporations, partnerships and limited liability corporations, such as the St. Louis Cardinals LLC. SB 509 would give their owners a 25 percent deduction off the top. Thus, a $500,000-a-year lawyer or lobbyist would get a tax break that the person who makes $25,000 a year cleaning his office wouldn’t.
The premise is that the “job creator” will invest his tax savings in expanding his business. He might. Or he might just buy bitcoins. Either way, the employees (think of them as “profit creators”) will pay state taxes at 5.5 percent just like the boss.
Now that the frat boys and sorority girls have had their fun, Gov. Jay Nixon must be the responsible adult. He must veto SB 509, as he did to an even worse tax-cut bill last year.
Last year’s bill was passed late in the session, giving Mr. Nixon all summer to campaign against it before the Legislature could reconvene in September for a veto attempt that failed. This year’s bill will have to be vetoed by May 1, giving the Legislature plenty of time to attempt an override by its May 16 adjournment.
The Missouri Chamber of Commerce and Associated Industries of Missouri are backing the tax cut. Last year top business organizations in Kansas City, Columbia and Springfield backed Mr. Nixon’s veto. In St. Louis, the Regional Chamber and Civic Progress ducked the issue.
Responsible business people and citizens know Missouri can’t cut its way to progress. That’s been tried and it’s failed. They should contact their legislators and remind them of that.