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Missouri Tax Cuts Die as Lawmakers Fail to Override Nixon Veto

Missouri’s Republican-controlled legislature failed to override Democratic Governor Jay Nixon’s veto of cuts in personal and corporate income taxes, slowing a political prairie fire that began in neighboring Kansas.

The vote yesterday in Jefferson City, the state capital, fell 15 short today in the House of Representatives, ending months of debate over the impact of $700 million in cuts. Nixon argued that they would hurt public schools and damage other government services. He led a coalition of school and health-care groups against business interests and Republicans.

“This bill wrecks Missouri -- let’s sink it,” said Democratic Representative Jill Schupp, poking at Rex Sinquefield, the St. Louis businessman who backed the effort to cut the taxes.

The bill approved by Republican lawmakers in May, the first reduction in the state’s income-tax rate since 1921, was promoted as a vehicle to make Missouri more economically competitive after Kansas reduced rates in 2012. It would have reduced the top individual rate to 5.5 percent from 6 percent, and dropped the corporate levy to 3.25 percent from 6.25 percent over the next decade.

“We’ve got to do something,” said Republican Representative Denny Hoskins, saying that business are leaving Missouri for lower taxes in Kansas.

Cause Celebre

Nixon vetoed the bill June 5, calling it an “ill-conceived, fiscally irresponsible experiment that would inject far-reaching uncertainty into our economy.”

Sinquefield, who led an unsuccessful ballot effort last year to repeal the income tax, backed a television ad campaign urging an override of the governor’s veto. Texas’s Republican Governor Rick Perry, injecting himself into the fight, campaigned for the cut during a visit to Missouri last month.

Nixon, 57, re-elected last November with 55 percent of the vote, responded with a campaign-style swing around the state, saying the cuts inspired by Kansas were budget-busters.

The top Kansas income-tax bracket dropped Jan. 1 to 4.9 percent from 6.45 percent. The state also eliminated taxes on almost 200,000 small businesses. Republican Governor Sam Brownback signed in June a further reduction to 3.9 percent, to take effect by 2018. That bill also set the state sales-tax rate at 6.15 percent, higher than the 5.7 rate that was scheduled to take effect.

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