Mo. Senate Backs Tax Overhaul Measure

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JEFFERSON CITY - The latest effort in the tax-fueled border war with Kansas gained first round approval in the Missouri Senate Wednesday.

The Senate endorsed a measure that would reduce both the state's income and corporate tax rates by about 1 percent each over five years, while creating 50 percent in tax deductions for small businesses during that same period.

Senator Will Kraus', R-Lee's Summit, 300 page tax measure lacked an official projection of what it will cost the state, although estimates from Kraus' office say the state can expect to see about $450 million in lost revenues. To account for this, the bill creates a .5 percent increase in the state's sales tax -- also phased in over five years.

The tax cuts are not as bold as those implemented by Kansas' massive individual income tax reductions. Analysts say those cuts contributed to the state's $267 budget shortfall.

"I'm not trying to do what Kansas is doing, I'm trying to stop the bleeding. I'm trying to stop the businesses from fleeing Missouri into Kansas," Kraus said.

Calling the measure "irresponsible," some Democrats expressed concern that sales tax increase is regressive and would force the poor pay a larger percentage of their income in sales taxes.

"What we should do should be very calculated, very vetted. And we should understand the potential consequences of the actions we're going to take today," Jason Holsman, D-Kansas City, said. 

The legislation still needs another vote before going to the House.