JEFFERSON CITY — A controversial House bill allocating $1 billion in tax credits passed the Missouri House last week and is now heading to the Senate for approval.
The bill – which promises a one-time tax credit of up to $500 for individual Missourians and up to $1,000 for married couples – has been criticized for being rushed through the committee and before the entire House, after its introduction less than two weeks ago. .
Critics also worry that the promises made in the bill are unrealistic with the amount of money allocated, and the bill would give low-income residents nothing at all.
House Budget Committee Chairman Cody Smith, R-Carthage, the sponsor of the bill, said the appropriation would use some of the record surplus the state has accumulated in general revenue. Year-to-date, Missouri’s general revenue has increased by about $644 million.
“To me, that means it’s time to give some of those dollars back to those who donated it, especially when they face challenges from inflation and various economic factors.” he declared.
“Even with this massive increase in state spending, there were still dollars on the table that could be spent. I would argue that you taking money and spending it where the government thinks it best is less efficient than issuing a one-time tax cut and letting you, the taxpayer, decide how to spend your money,” wrote the Rep. Josh Hurlbert, a Republican who represents District 12, including parts of Clay County like Smithville, in his Capitol newsletter sent to voters Friday, April 22. You need the money to help pay for the price increases we’ve seen across the state thanks to the policies of the Biden administration. You really know how best to spend those dollars, as opposed to the state spending them in a rushed process.
At a committee hearing last week, Revenue Department staff said the bill as drafted would be a “huge administrative hurdle.” The ministry should set and enforce a deadline for residents applying to receive the credit or risk running out of money. That deadline would likely be mid-October, the extended tax filing deadline, said Zach Wyatt, the department’s legislative liaison.
Wyatt also predicted that call centers would be “inundated” with complaints and confused residents if they didn’t receive the full tax credit. According to estimates from the Budget and Planning Division of the Office of Administration, if the billion dollars is distributed among all eligible residents, the maximum credit for a single person will be $378.66.
Smith told the committee there were options to address those concerns, including raising the allocation above $1 billion or lowering the maximum amount from $500. On the bill that passed Thursday, however, no such changes were made.
House Democrats called the bill misleading, given that no resident is likely to receive a full $500 credit.
“This is a political scam, and I’m frustrated with it,” said Rep. Peter Merideth, D-St. Louis, a ranking minority member of the House Budget Committee. “I’m frustrated with this, and I think Missourians should be too, because they’re being lied to.”
Because the credit is non-refundable, Democrats were also concerned that it would not apply to those who are exempt from income tax because they earn little or no money each year, such as retired seniors and low-income workers. Based on 2019 tax data from the Budget and Planning Division, about 27% of Missouri residents would receive $0 from this credit.
These concerns are shared by the Missouri Budget Project, a nonprofit organization that advocates budget policies that benefit low-income residents.
“The taxpayers who won’t get this refund are the very people who pay most of their income in state and local taxes,” spokeswoman Traci Gleason said. “We hope that if the Senate considers HB 3021 or other tax refund proposals in the remaining weeks, senators will prioritize — or at least include — those Missourians who are having the most difficulty affording tax. gasoline and putting food on the table.”
Republicans defended this aspect of the bill.
Rep. J. Eggleston, R-Maysville, said the credit is for those “who have actually earned it in a sensible way.” He listed various social service programs, including food stamps and Obamacare, and argued that they had failed in their goal of ending poverty in the United States.
“We found all kinds of ways to take from those who won, to give to those who didn’t, in an effort to try to get a result,” he said. “I can assure you that if we teach people how to fish, they will be better fed.”
Rep. Shamed Dogan, R-Ballwin, added that the House has in the past approved bills offering appropriations to some — but not all — Missouri residents. He argued that the fact that credit would not be given to everyone should not prevent its approval.
“You don’t object to a tax credit or object to helping people just because it doesn’t help everyone,” Dogan said.
The bill passed 103 to 44 votes and is now heading to the Senate, where leaders said it was too early to say whether it would be approved.
“I think the idea of giving money back to taxpayers because we’re so greedy isn’t a bad idea,” said Senate Majority Leader Caleb Rowden, R-Columbia. “How you do it is important, when you do it. Is it able to be carried out effectively and really aimed at the right people? I think all of that is really important. We’ll take a look at it once he’s there.
Sen. John Rizzo, D-Independence, said he thinks the nonrefundable aspect of the bill misses the goal of helping Missourians who need it most. He noted that disagreement over the bill really stems from a fundamental divide between Republicans and Democrats over the role of government in the economy and social services.
“It’s just the different approach we have as Democrats and Republicans,” Rizzo said. “They believe the money trickles down, and we believe it starts at the bottom.”