Corporate Franchise Tax Being Phased Out
JEFFERSON CITY - Missouri lawmakers are discussing Governor Nixon's decision to sign a bill to eliminate the corporate franchise tax. The tax, paid by roughly 3,000 businesses in Missouri, will slowly phase out until it is completely eliminated by 2016. But while the bill is now law, lawmakers still disagree about the effects it will have on Missouri.
Senator Eric Schmidt of Glendale, sponsored the bill and said this will help bring business to Missouri. Other states, like Kansas, have already removed similar taxes. By eliminating it, Missouri will become more affordable than other states for businesses.
Opponents of the bill, however, are concerned about the $87.5 million in revenue lost when the tax is gone.
"Illinois rose their corporate franchise tax this year, so we think eliminating it here makes a nice contrast for us," Schmidt said.
He said he hopes this tax relief will encourage Missouri businesses to expand here and out-of-state businesses to consider moving here.
"Before this law, businesses got to $9 million in assets and there was actually a disincentive for them to keep growing, because when they crossed that $10 million dollar threshold they'd have to start paying the tax on the whole $10 million," he said.
But some continue to worry about how to recover lost revenue.
"Even if this brings in more business we're probably not going to make up all those lost revenue dollars," said Senator Ryan McKenna, D-Jefferson County. "But it should be good for business in Missouri, and if the governor put his signature on it, it's clearly something he thinks can help turn the economy around."