Missouri House Bill 253…Vetoed! (Part III)
Now all of a sudden Missouri Gov. Jay Nixon is concerned about certain businesses getting preferential treatment in the tax code. Specifically, in his veto of Missouri House Bill 253, Nixon said that it “…provides preferential treatment to select Missouri businesses, while discriminating against the majority of others based solely on the paperwork the businesses filed to organize.”
First, a quibble. Nixon says this “preferential treatment” will be discriminating against the majority of businesses in the state. That left me confused. How did the governor reach that conclusion? According to figures from the Missouri Department of Revenue, the state has 128,126 pass-through entities (including S-Corps). The total number of C-Corps is 68,185. By most rules of math that I know, 128,126 is a larger number than 68,185, so I can’t possibly see the governor’s point here.
Does HB 253 create preferential treatment for one type of business, as the governor fears? Eh, not really. Both the pass-through entity and corporate income tax cut are nearly the same amount. It is true that the corporate income tax cut only goes into effect if certain revenue targets are met, and it will take 10 years to be fully enacted instead of the five years for the business tax deduction. In the long run, however, the amount of the tax cut will be nearly identical. If the governor has evidence that this short-term difference will negatively impact Missouri businesses, he should present it.
It also is humorous that the governor is criticizing companies getting preferential treatment through the tax code. This is the same governor who extolled the benefits of the Mamtek deal, which was awarded $7.6 million in Missouri Quality Jobs tax credits and $6.8 million in Missouri BUILD tax credits. Economic development tax credits, by their very nature, give preferential treatment in the tax code. I wonder what brought on the change in outlook. The governor has voiced support for tax credit reform, but he hasn’t been hesitant to take credit for the supposed “benefits” that they create.
HB 253 is by no means a perfect bill, but it is a step in the right direction. Nixon has listed his reasons for vetoing the bill and hopefully I have conveyed how those fears are either imagined or overstated. Hopefully some kind of tax reform is enacted. Missouri cannot afford to wait too long.