House Advances Major Tax Reform

The Missouri House took a considerable step toward sweeping tax policy reform to achieve and promote an economic rebound this week, perfecting and passing HCS SS SCS SB 26, 11 & 31. This bill reduces income taxes at all levels, not just for large corporations.

Missouri must have a friendly business climate in order to compete in the global economy, and attract businesses to our state. But this measure goes further and rewards the hard work of individuals and the risks of entrepreneurs. Through SB 26, the House aims to make Missouri not only business-friendly, but family-friendly, entrepreneur-friendly, and job-creator-friendly.

Over a five-year period, this legislation will reduce the individual income tax from the current 6% rate to 5.33% and Missourians with incomes under $20,000 will receive a $2000 income tax deduction. For businesses, the current corporate income tax rate of 6.25% will go down to 5.5% and the businesses first $25,000 of corporate income will not be taxed at all. The most important cut, however, is the 50% reduction on the business “pass through” income tax. These “pass through” corporations – the sole proprietorships, partnerships, and S-corporations – generate more than half of the business income in the United States. Small businesses are truly what keep this country – and this state – moving.

Missouri will make up for the revenue difference by phasing in a 0.6% sales and use tax over the next five years. Opponents of tax reform say this will devastate the poorest Missourians, but this is false. Necessities like food, gasoline, and mortgages will not see any sales tax increase. Meanwhile, individuals who have the means to buy new cars every year will make their contribution through an increased sales tax.

To ensure Missouri does not have a revenue deficit crisis, the bill has a built-in stopping device. Each phase of the individual and corporate income tax cut is dependent on a revenue increase of at least $100 million from the previous fiscal year. Simply put, if the tax cut does not work as expected, we will not continue it.

Overhauling our tax structure will undoubtedly mean some changes, but these will be rewarding changes. A cap on revenue will force future legislators to be true stewards of Missourians’ tax dollars, instead of jumping to create a new government program every time a problem arises. New programs often start with good intentions, but more often than not, half the money allocated to programs for the less-fortunate goes to administrative costs.  In other situations the programs produce little benefit with less than promised results.

The legislature should not be in the business of creating government jobs. Bureaucratic jobs often outlive their use and under-employ their workers. In the past few months we have seen federal employees – educated, hardworking individuals – lose their jobs due to sequestration. The only way to stop this trend is to encourage businesses to open up in every town and city. We have to remove the barriers for smart, dedicated individuals to set up their own shops and furthermore, we need to encourage families to reinvest in the local economy by allowing them to keep more of their money.

That is what SB 26 does for our state. It enables entrepreneurs to fulfill their dreams of starting a local business. It attracts corporations to relocate to Missouri, bringing with them hundreds of positions for good, family-sustaining jobs. And it gives Missourians a break, allowing them to keep more money and spend it as they like, on goods and services in their local economies, and giving their own neighbors a helping hand.

SB 26 now returns to the Senate for final legislative approval before heading to the Governor’s desk. This measure is something both the House and Senate believe in. No matter the Governor’s action, your Republican-led House will continue to pass similar legislation to help our state rebound, and place more of your hard earned dollar back in your family’s budget.

House Advances Triple E Agenda

This week the House took action on Rep. Anne Zerr’s HB 698, which contains many of the legislative proposals I outlined as part of my “Triple E” Agenda.  This agenda, with its focus on education, energy, and economic development, hones in on what Missourians have consistently told legislators are the focus of their families and co-workers. 

What Does HB 698 Do?

This legislation has many proposals that aim to cut, cap, and create tax credits.  We have focused on several industries that have great potential for economic impact or already offer great benefit and could become stronger if government would not penalize them so greatly with taxation.  A few of these are listed below and I would encourage you to visit www.house.mo.gov for more information. 

Data Storage – This multi-billion dollar industry is bringing high-paying jobs to local communities across the country.  Other states are benefiting greatly because of the incentives they have in place to encourage investment within their communities and we want Missouri to follow suit.  If a facility were to come to Missouri, the construction costs, which are much greater than normal warehouse construction, would be a boon to the construction industry and those that supply it.  The high-tech jobs that would result would add millions in payroll to the local economy and bring with it benefits and healthcare to more Missourians. 

Angel Investment – Our angel investors take enormous risk to bring new products to their full production and sales potential.  Investors will be treated in much the same way as donors to charities – they will get a portion of that investment back in the form of a tax credit that can be utilized against their state tax liability in 2013 or in the next five (5) tax years.  The science and manufacturing industries stand to make great gains whenever the government lets innovation take over and the private sector do what it does best – create jobs.
 
Historic Tax Credits – For many years we have authorized tax credits on qualified renovations to our state’s historic buildings.  Downtowns have been revitalized, new housing opportunities have become available, and Missourians have been put to work in the construction, real estate, and other industries.  We have continued this incentive with added budget controls because of its great benefits to local communities large and small.  With a little reworking, our state’s budget makers will be aiding in predicting revenues and the private sector can continue keeping Missourians employed and our historic districts from wasting away.

HB 698 Economic Development Vlog

Triple E Agenda - Economic Development

A variety of proposals are moving throughout the House of Representatives that are aimed at impacting what matters most to Missourians: jobs.  In fact, we have already passed several key priorities that will encourage private sector solutions.

HB 385 - Amateur Sporting Event Incentives

Representative Burlison continued championing this cause to utilize a state tax credit to attract major sporting events, such as NCAA tournaments, to Missouri facilities.  When these large events come to town, everyone on “Main Street” benefits, in cities large and small, all across Missouri..  From advertising to hotels and restaurants, local economies see large surges in sales.  Missouri needs to compete every day with our eight surrounding, very competitive neighboring states, and now it is up to the governor to make sure we do.  In fact, this tax credit proposal demands strong taxpayer protections by requiring that the site selection committee must be considering other states to take their event before we can even offer the credit and the credit is based only on “new” money brought into our state budget.  Many of these competing states have similar incentives in place.  The House took a great first step in approving HB 385 and then finalized the proposal by passing a companion Senate bill and sending it to the governor’s desk.

HB 87 - Benevolent Tax Credits

This legislation offers tax credits for our private sector partners to tackle tough social issues – from children in crisis to pregnancy resource centers.  We know that you have a heart to serve, but paying taxes to a bloated government that is wrought with fraud and abuse just does not cut it.  Our not-for-profit community needs our support – it employs thousands of Missourians and provides services to so many more.  In offering a tax credit to organizations that offer so many great services, private, charitable donations are leveraged along with the good nature of Missouri’s citizens.  This proposal was finalized by the House and a nearly identical Senate proposal was “Truly Agreed To and Finally Passed,” meaning it only awaits the Governor’s signature.

 
HB 320 - Clarifying Missouri's Anti-Discrimination Statutes and 'Whistleblower' Protections

Representative Kevin Elmer's proposal to add "Whistleblower" protections to statute and reform the state's anti-discrimination laws will add certainty back into our legal system for both employers and employees.  Currently, our whistleblower protections are left to common-law and up to interpretation by the courts.  Our employees should be able to turn to the law to protect them when they face situations where they risk their jobs to report unlawful practices in the workplace - and they should know precisely how they are protected. 

Employers also deserve more clarity.  This proposal will bring Missouri's anti-discriminatory laws back in line with the Civil Rights Act, Age Discrimination Employment Act, and Americans with Disabilities Act which served our state well for decades before our laws turned against job creators.  Non-economic damages would now be capped at the very reasonable level of $500,000.00 per claim.  This significant amount will discourage discriminatory practices while also keeping frivolous lawsuits at bay - frivolous lawsuits that waste money that could be spent on expanding a business or hiring new employees.  One of the most important factors affecting a business’s decision to relocate to our state or grow its footprint here is a stable, certain and fair litigation climate.  HB 320 meets that goal.

HB 64 and HB 409 - Adding Choice to Missouri's Labor Laws

Too often, our public facilities and employees are held hostage by stringent labor laws that limit choice.  If you run a rural, government institution, like a school district, you have to pay “prevailing wages” for your maintenance and construction which is ultimately borne solely by the taxpayers.  And if you are looking for work at a union shop, you have to pay fees regardless of whether you want to join the union.  The problem is, rural prevailing wages are measured using a formula many would agree is too heavily influenced by urban rates.  Moreover, labor unions participate in political activity.  Employees do not always agree with the politics espoused by their union bosses, but they must pay the fees that support that activity anyway.  Both of these scenarios are just wrong and need reform and your Republican-led legislature has taken the issue to task. 

HB 64, sponsored by Rep. Eric Burlison, will allow unions to utilize employee fees for political purposes, but only if the employee consents in writing each year.  HB 409, sponsored by Rep. Warren Love, will realign the formula utilized by the Department of Labor and Industrial Relations to determine prevailing wage in our rural regions so that they are less influenced by urban wage rates.  This is much more fair and equitable to the taxpayers and will likewise encourage more projects to be undertaken (because greater funding will be available) along with the creation of more jobs.  The proposals were finalized by the House and if approved by the Senate, will reform the anti-choice policies of yesterday and help catalyze future growth in Missouri's economy.    

Encouraging Economic Growth with Smart Tax Policy

Each year, a number of amateur events are hosted around the country.  The organizing committees, such as the National Collegiate Athletic Association, United States Olympic Committee, or United States Golf Association, scan the country in search of event locations where their competitions can be held, attended, and successful.  These events encourage economic activity from advertising to local restaurant sales and hotel bookings and many states offer tax credits to incentivize these selection committees to choose their available locations.

 

Senate Bills 10 & 25 would offer a common sense tax credit to encourage Missouri locations to be selected as venues hosting these types of amateur events that would otherwise take place in a different state.  In fact, the legislation stipulates that another state must be in consideration for the event to qualify for the state tax credit.  With guarantees that other states would be in competition, the Republican-led legislature decided in an overwhelmingly bipartisan fashion that Missouri needed this tax credit incentive to land these events.  The credit rewards those who are bringing revenue, tourism, jobs and notable events to our State while at the same time containing significant taxpayer protections.  The measure was “Truly Agreed and Finally Passed” this week, meaning it now only awaits the Governor’s signature to become law. 

Bonding Issue, Continued...

Recently, I wrote to you about a bond proposal that will help the state repair its infrastructure.  Whether transportation, higher-education, or state facility related, our infrastructure provides the necessary framework for a stable, prosperous economy.  The condition of our infrastructure demands action – today.  In response, I have proposed a bipartisan solution: House Joint Resolution 14.  This Resolution, labeled “Funding for Higher Education, Improvements, Construction, and Transportation Infrastructure”, will provide the funding necessary to accomplish the task we have at hand.

Because of the magnitude of this undertaking, I formed the Appropriations Committee on Infrastructure and Job Creation chaired by Representative Chris Kelly; a strong advocate for bonding and a senior member of the democrat party in the House of Representatives.  In short, the responsibility of the 17 member committee will be oversight of all use of funding generated through the bond issue. 

Benefits

This investment in our state will contribute to more advanced education in our higher learning centers around the state.  It is imperative we are able to educate our students to meet the technological demands placed upon them now, and in the future.  An educated workforce attracts investment in our state and spurs economic growth.  As the economy in Missouri improves, revenue to the state increases.  This means more funds will be available to fund other critical state service, which keeps taxes low.  

As the Third State Building Bond did in the years following its approval, voter approval for the Fifth State Building Fund will provide the necessary funding for our infrastructure needs, help to insure an educated workforce, and spur economic growth and opportunity in Missouri.  The 1982 bond issuance was responsible for creating an estimated 40,000 plus jobs.  This is clearly a win-win situation.

Whether the bond issuance directly pays for repairs to our transportation infrastructure or frees up state funds for the repairs, we desperately need to make the necessary repairs and improvements to our highways and bridges.  It is estimated the average driver will pay around $540 in auto repairs every year due to poor conditions of our roads and bridges.  Interstate 70 is a prime example of our infrastructure needs.  Designed to support 18,000 vehicles per day, the least travelled sections now experience 31,000 vehicles daily; nearly twice the number it was designed to carry.  These numbers will continue to increase as our population continues to grow.  A clogged highway system - in desperate need of repair - creates unsafe driving conditions for you and your family. 

Poor transportation infrastructure also negatively impacts trade.  Nationally, we stand to lose $72 billion annually in foreign trade alone due to these deficiencies.  The economic impact is staggering to think about.  We must take the initiative now to right this ship and prepare our transportation infrastructure to accept the demands being placed upon it now, and for the foreseeable future.  We cannot, in good conscience, continue to deny funding for the critical repairs and improvements to our roads and bridges. 

This is the right thing to do for your safety, the safety of your family, and makes good economic sense.  This bond issue is a clear example of how responsible borrowing to fund capital improvements can truly better a society – we will not adopt the “Washington Model” of “over-borrow to force tax increases.”  We will live within our means and we will balance the budget.  Always.  

 

For a complete description of my HJR 14 and the Joint Committee on Capital Improvements and Leases Oversight, please visit www.house.mo.gov.

Economic Development 1/10/13

There is one thing many in Jefferson City can agree on and that is better jobs mean better quality of life. This interim I’ve visited with countless constituents and other legislators about their thoughts on what we can do to improve Missouri’s economic position because it’s time our unemployment rate was the lowest in the nation and not just average. Here’s a sample of what has been mentioned:

Restore Medical Malpractice Protections

There is no denying it, physicians practice where they can afford to do so. With malpractice insurance premiums rising some 25%, we are bound to lose physician jobs to places that protect doctors like Kansas. Our citizens on the border in places like Kansas City, St. Joseph, and Joplin need quality physicians to provide critical care. Look to the legislature to protect physicians from frivolous lawsuits so more Missourians will have real access to the best care possible.

Tax Credits

Debate on this issue will continue this year. Certain programs cost too much and provide little return. Others, like those for data centers and angel investing have high rates of return to the state and have vast, positive impact on local economies. Our strategy here will be multi-faceted: cut, cap, and create. We'll cut programs that don't work, cap programs to provide stability to the state's budget, and create an stronger economic environment as a result.

Paycheck Protection & Right to Work

You shouldn’t be forced to pay for a political advertisement or lobbying you don’t agree with. Along those same lines, if you want to work you shouldn’t be forced to join a union. If given the choice between a right to work state and one that has forced unionism, employers go to right to work.
 

Transportation
 

Transportation is the lifeblood of any strong economy. It's why many of your largest cities are built near rivers, ports to sea, or have a highway that connects them to one of those two. Missouri is centrally located in the country, which is why we have a strong trucking industry that provides thousands of jobs, benefits, and healthcare to our citizens. Your legislature will be looking at ways to invest in our transportation infrastructure to ensure its continued ability to transport our people, our goods, and our visitors in an efficient manner.