Missouri Budget Project says income tax bill won't help most people
COLUMBIA - Governor Mike Parson signed a bill Thursday that will cut the state's highest individual income tax rate from 5.9 percent to 5.4 percent in 2019.
This makes it the largest single year income tax cut in state history.
House Bill 2540 will take effect on the heels of earlier tax cuts passed by state legislature.
A law passed in 2014, Senate Bill 509, allowed gradual income tax cuts based on state revenue growth.
State Treasurer Eric Schmitt confirmed revenue growth will trigger a cut from the current 5.9 percent rate down to 5.8 percent in January because of the earlier law. That covers the top tax bracket, which applies to most Missourians.
On top of that, the new law Parson signed will bring the rate down 0.4 percent.
The rate could gradually go down to 5.1 percent depending on state revenue growth, making Missouri the 14th lowest income tax state in the country.
In a press release, Parson called this the “first step in an ongoing process.” He also said there is a need to continue to make the Missouri tax code simple and fair.
However, the director of communications of the Missouri Budget Project, a non-profit public policy that analyzes state budget, tax, health and economic issues, said working class Missourians will not see any major changes to their tax forms.
"I am confident in saying that it has negligible impacts on our income except those of the wealthiest Missourians," Traci Gleason said. "And the state earned income tax credit will have a broader impact on the lower and moderate income Missouri families."
Gleason said the bill is very complicated.
"A lot of working families are going to see negligible differences as a result of it," Gleason said. "It's very complicated because in a way it works with other tax provisions that have been implemented so for many of them it would be a wash."
Gleason said more work needs to be done for Missourians when it comes to HB2540.
"If we'd like to achieve the goal of making our tax code fairer and helping our community's needs, then we have more work to do in the upcoming session."