Finally, A Bill That Promotes Growth: Reducing Missouri’s Corporate Income Tax
Here at the Show-Me Institute we review a lot of bad proposed and enacted legislation, but every once in a while, we find something that could be a gem. I think such a bill may be Senate Bill 661, which in just three pages sows the seeds for a massive realignment of Missouri’s development schema. The bill, introduced by Missouri Sen. Eric Schmitt (R-Dist. 15), is now on its way to a full vote in the Senate. Among other things, the bill would cut Missouri’s 6.25 percent corporate income tax by half within five years to:
- 5.625 percent for 2012;
- 5 percent for 2013;
- 4.375 percent for 2014;
- 3.75 percent for 2015; and
- 3.125 percent for 2016 and beyond.
Show-Me Institute Policy Researcher Michael Rathbone and I have talked again and again and again (and again!) about reducing the corporate income tax, which is one of the most destructive taxes in terms of economic growth. As we have argued, eliminating wasteful economic development tax credits would make up for much of the cost of a corporate income tax elimination, assuming legislators are seeking to make the tax cut revenue neutral. SB 661 does not go quite that far — focusing only on tax reduction and not on development tax expenditures — and admittedly, the draw-down is slower than I would like, but it is a great idea and the right direction for Missouri policy.
Who knows? If Missouri starts phasing out its corporate income tax, perhaps the wastefulness of the state’s economic development tax credit system will become clearer.