Missouri looks to phase out corporate income tax by 2019
COLUMBIA – A Missouri lawmaker is looking to phase out the state’s corporate income tax.
Sen. Will Kraus, R-Lee's Summit, is looking to phase out the 6.25 percent tax by 2019. This is in line with President-elect Donald Trump’s ideas to cut down on corporate income taxes.
This announcement comes after Democratic Gov. Jay Nixon revealed more state budget cuts.
University of Missouri economics professor Joseph Haslag talked about what costs and benefits losing the tax would have.
“You’re going to lose the resources, the state will lose the ability to spend those resources on schools and roads and all the various things the state government buys," Haslag said. "The benefit is more of a longer term thing. So you lower the tax rates on corporations and what that does is it raises the after tax prices, the returns that they’re going to get."
Haslag said there are other ideas, such as getting rid of both the corporate income taxes and the state income tax credits.
“We get about 5 to 6 hundred million dollars a year [are] redeemed in state income tax credits. If you were to eliminate those, phase them out over the same time, you’d be losing, let's say 300 million dollars in corporate income tax revenue. But you’d be getting an extra 600 million in state income tax credits that are no longer available,” Haslag said.
He also mentioned that this program would not hurt the economy as much as an immediate phase out would.
"You’d get the benefits of the extra growth from eliminating the corporate income tax. You wouldn’t have to suffer any of the short-term illnesses or problems that go with seeing a sharp reduction in the state revenue pictures,” Haslag said.
Currently, Missouri’s flat corporate income tax is lower than other surrounding states.
As for neighboring states, Haslag said Kansas tried changing income tax rates for limited liability corporations and it did not fair well.
Even though Kansas is now seeing a growth, Haslag said they have yet to catch up to where they were before they tried the change.
KOMU 8 tried to reach Kraus for comment Monday, but an office worker said he's out of the state.