Over the last month, there were rumblings in the media and on Twitter that not only might Governor Mike Parson veto the tax rebate bill passed by the legislature during this year’s legislative session, but that a special session—a reconvening of the House and Senate to pass more bills—might be called by the governor, as well. Rumors of a veto started almost immediately after the legislature finished its work in May, but doubts remained about whether the governor would really veto tax relief in an election year, especially after a gas tax hike.
But six weeks of veto rumblings rolled into a veto thunderclap early this month when most Missourians were preparing for the July 4 holiday weekend. That Thursday, the governor not only vetoed the rebates but also declared his intent to reconvene the legislature in a special session to pass an even more extensive overhaul of Missouri’s income tax:
“We have managed our state resources responsibly and our consistent investment in workforce development and infrastructure is providing a strong foundation for Missouri. Now is the time to take additional steps to help alleviate the strain on Missouri families. Permanent tax cuts that provide real relief to families, senior citizens, the working class, and small businesses every year is a better answer to the inflationary pressures we face, and we look forward to getting it done,” Parson said in the statement.
Parson’s plan includes reducing the individual income tax rate, increasing deductions and allowances for taxpayers and further simplifying the tax code, to create the “largest tax cut in state history,” according to the release.
Under the proposal, the first $16,000 of income for single filers, or $36,000 for joint filers would not be taxed at all, according to a release about the proposal from the Missouri Republican Party.
Special sessions are not unusual but they aren’t terribly common, either; the time and extra cost of bringing legislators back to the capitol often compels elected officials to put off even important reforms until regular legislative business resumes in January. That the governor won’t wait until 2023 to institute tax reform is encouraging.
As to the substance of the proposal as I currently understand it, I am broadly excited by it. Show-Me Institute analysts have long supported eliminating the state income tax, and by increasing the standard deduction for all Missouri filers while simplifying the tax code and reducing the income tax rate, the governor’s current proposal sets out a straightforward framework for dumping the tax over time from both “the top” and “the bottom” of the tax code. My hope is that the legislature’s plan also includes at least a handful of triggers for further tax relief in future years.
I’d be remiss, of course, if I didn’t also suggest that income tax reform should be only one of perhaps a handful of special session topics that could be addressed in the session. Notably, one major regret the governor admitted to after the legislative session was that curriculum transparency legislation didn’t get done this year; this seems like an easy topic to address when the legislature gets back together.
It remains to be seen when exactly the special session will be called, but the odds are it will be called concurrently with the veto override session scheduled for September, when legislators will already be back at the capitol. Hopefully, the special session leads to good tax policies for the state at a minimum, and ideally an opportunity to call up additional topics. Fingers crossed.
