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Gov. Eric Greitens visits Arrowhead Building Supply to talk about his tax reforms.
Gov. Eric Greitens visits Arrowhead Building Supply to talk about his tax reforms.

Governor promotes tax reform in Springfield

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Gov. Eric Greitens this morning visited Springfield to promote plans for changes to corporate and personal income tax rates.

Greitens spoke at Arrowhead Building Supply, 3020 N. Martin Ave., as part of a six-city tour pitching a decrease in the corporate tax rate in Missouri to 4.25 percent from 6.25 percent, along with other tax cuts and some counteracting hikes.

“We're going to have the second-lowest corporate tax rate in the country,” he said.

Corporate taxes are collected in 44 states, according to independent tax policy research organization The Tax Foundation. North Carolina places a 3 percent tax on businesses, while North Dakota, Colorado and Arizona have rates between 4.31 and 4.9 percent. Iowa’s corporate tax rate is more than two points higher than any other in the nation at 12 percent.

While Missouri’s rate already is lower than five of eight bordering states, Greitens said a further decrease would attract employers to Missouri.

“We’re in a competition every day. We’re in a competition with Michigan, with New Mexico, with Virginia, with Florida,” he said. “We’re also in a competition with places around the world. We have to have a great environment for people to come and build businesses.”

As he said in the state of the state address earlier this month, the governor reiterated this morning he also wants to cut the state’s 113,000 regulations by about a third.

In order to balance the budget, Greitens proposed several changes to the tax code to increase state revenue, including removal of the timely filing discount.

Missouri currently offers to vendors a discount up to 2 percent for filing sales taxes on time, Greitens said, noting Missouri is one of the only states in the country to provide an uncapped discount.

“The government gives a discount to some business just for doing what everyone is legally required to do,” he said.

Timely filing discounts are offered in 28 states, but most put restrictions on the amount that can be collected, according to a report released by Avalara Inc., a software platform that specializes in sales tax and other transaction tax compliance. For example, Kentucky only allows each business a $50 savings per month.

Missouri’s discount is the second most generous in the country, and it cost state taxpayers $114 million in 2016, according to nonprofit public policy analyst The Missouri Budget Project.

Greitens also wants to require companies to use only one of three tax-calculation rubrics currently available. He said businesses should be taxed based on a ratio of their in-state sales and total sales. This would eliminate the two other options that calculate taxes based on in-state capital verses total capital or in-state payroll compared to total payroll, options Greitens said encourage out-of-state investments.

Greitens also would like to end the federal income tax deduction for businesses and phase out the deduction for individuals – essentially raising taxes.

But he said most individuals would see a decrease in their personal income tax rate.

If his plan was adopted, the top personal income tax rate would drop to 5.3 percent from 5.9 percent, and 97 percent of Missourians would see a decrease in state income taxes.

“Everybody in the state of Missouri who makes over $9,000 [a year] is going to see a 10 percent cut in their tax rate,” he said. “Three-hundred and eighty-thousand of the hardest working Missourians are going to see their tax bill cut to zero dollars and zero cents.”

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