Income tax relief heads to Senate

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Missouri’s Republican-led House on Thursday passed a bill that would provide refunds of up to $1,000 for state income taxes owed this year.

Lawmakers voted 103 to 44 to send the non-refundable tax credit legislation to the GOP-led Senate, where Republican Majority Leader Caleb Rowden said he faces an uncertain path.

The House proposal would allow discounts of up to $500 per person or $1,000 for married couples.

In practice, if a person owes $1 in state income tax at the time of filing, they would be refunded $1. If a person owes $600 in income tax, they will be reimbursed $500.

Individuals and couples who owed nothing would not qualify.

The bill would set aside $1 billion in excess revenue to pay for tax refunds.

Republican supporters in the House have said Missouri should return money to taxpayers when it has a surplus.

“We think the taxpayers of Missouri should get it back and they know what to do with it better than we do,” said Republican House Budget Committee Chairman Cody Smith, who sponsored the legislation.

He said during the debate on the bill on Thursday that he thought “taxation is theft.”

Democrats have argued that the promise of tax breaks of up to $500 or $1,000 is misleading because many taxpayers would receive little or no return, with the wealthiest expected to receive the biggest rebates.

According to the nonprofit Missouri Budget Project, the lowest earners — those earning $22,000 a year or less — would on average get an $18 refund under the bill. Households earning $552,000 a year or more, which is considered the top 1%, would recoup an average of $884.

The Missouri Budget Project analyzes the state’s financial problems considering their impact on low-income residents.

“We don’t really support the hard-working men and women who need it the most,” Democratic Rep. Rasheen Aldridge said of the bill. “We’re going to give it to people who are already well off.”

Rowden said Thursday that while Senate Republicans support returning money to taxpayers, there is disagreement over whether Smith’s proposal is the best way to do it. He said he was “always trying to find ways to give money back to the middle class” and ideally everyone would qualify for tax relief.

Senate Minority Leader John Rizzo said Democrats favor a refundable tax credit, meaning all taxpayers would be entitled to a refund. A Republican-sponsored bill that would provide $500 refundable tax credits to all taxpayers this year has yet to make it to committee.

Missouri lawmakers face a May 13 deadline to pass legislation.

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