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Mo. Lawmakers Look to Fire Back in Business Border Battle

Posted: Jan 3, 2013 6:52 AM by Nick Thompson
Updated: Feb 13, 2013 6:06 AM

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JEFFERSON CITY - Missouri lawmakers have filed several proposals to cut income taxes in Missouri for the upcoming legislative session, citing the need to keep up with Kansas.

Kansas passed legislation in May that took effect at the beginning of this year. It reduces the top individual income tax rate from 6.45 percent to 4.9 percent and eliminated income taxes altogether for 191,000 businesses. Missourians currently pay individual income taxes of 6 percent on taxable income above $9,000.

Kansas also provides loftier incentives to businesses in the Kansas City area. According to an analysis by the Associated Press, Missouri and Kansas have doled out $750 million worth of tax incentives in the region in the last five years, with three quarters of that spending coming from Kansas. A 2009 Kansas law allows companies that re-locate to retain 95 percent of their employee witholding tax for up to ten years.

Business leaders in Kansas City have expressed worry that businesses moving across state lines are only creating what economists call a "zero-sum" game, where millions in state incentives are paid with no real benefit to the region.

In the Missouri Senate, some lawmakers look to follow the Sunflower State's lead. The proposals include:

-A plan pre-filed by Sen. Brad Lager, R-Savannah, that eliminates the state's corporate income tax rate altogether by 2018.

-A proposal by Sen. Eric Schmitt, R-Glendale, that reduces the corporate rate and will allow a 50 percent deduction for business income by 2016.

-A bill pre-filed by a Kansas City area lawmaker, Sen. Will Kraus, R-Lee's Summit, that lowers rates on corporate, business and individual income.

-A bill pre-filed by Sen. John Lamping, R-Ladue, that flattens the individual income tax rate at 4 percent and raises cigarette and sales taxes.

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