Legislation advanced by the Senate this week will put more money in Missourians’ pockets. Bill co-sponsor Sen. Will Kraus, R-Lee’s Summit, said Senate Bill 509 & 496 phases in a reduction of individual income tax by one-half percent over five years beginning in 2017. This is a people’s tax cut, giving Missourians more take home pay. The bill is a reasonable and sustainable approach which promises to make Missouri more competitive with its neighbors, and with other countries. 

The economy of our state relies heavily on our small businesses. From our local restaurants to our neighborhood auto mechanics, we depend on businesses like these to keep our communities growing. Small business owners are hard-working, passionate people and they are doing their best just to put food on the table for their families. Small business operations like local plumbers or dry cleaners are essential parts of our communities, and the people who run those businesses deserve our gratitude.

Senate Bill 509 & 496 would also help ease the financial burden on small businesses. The legislation will reform our current tax code by phasing in an income tax deduction for businesses. Once the changes are fully implemented small businesses would be allowed to deduct 25 percent of business income for all tax years after 2017. This is not a corporate tax cut; the bills would only affect small businesses.

Bill co-sponsor Sen. Eric Schmitt, R-Glendale, said small businesses are not only the backbone of our communities, but they also employ more than two million people in the state. Ninety-four percent of Missouri businesses have fewer than 50 employees. Seventy-seven percent have fewer than 10, and sixty-four percent have fewer than five. We also have an emerging high- tech industry that is being incubated in our cities. Many of those employ only a few people. We need to reinvest capital into those ventures, and the business pass-through deduction will do that.

Despite the numerous improvements the bill creates, many people worry about the cost a tax cut would have on our state. To address that concern, this legislation has a trigger that would not allow the bills to go into effect unless the state’s revenue increases by $150 million each year before the next tax cut could take place.

The changes proposed in this legislation will not only help stimulate the economy, they will create jobs and generate more revenue. Tax reform is a crucial part of our economic development policy. By adopting these changes, we can send a strong signal that the Show-Me State is open for business.

I always appreciate hearing from you. If you have any questions about the topics discussed above, or any other legislative or district issues, please do not hesitate to contact my office.