Department of Revenue Director Joel Walters said the cuts, along with a tax credit for low-income workers, would cost about $800 million. But both he and the governor said tax hikes in other areas would make the plan revenue neutral.
Missouri Gov. Eric Greitens called Monday for 10 percent cuts in personal income tax and reductions in corporate taxes as part of what he has described as the "boldest state tax reform in America," promising that the roughly $800 million cost will be offset by eliminating deductions and incentives elsewhere.
During a visit to a metal parts factory in rural Macon, Missouri, the Republican governor said he wants to cut personal income taxes from 5.9 percent to 5.3 percent. His plan would also cut the state's corporate taxes from 6.25 percent to 4.25 percent.
Department of Revenue Director Joel Walters said those cuts, along with a tax credit for low-income workers, would cost about $800 million. But both he and the governor said tax hikes in other areas would make the plan revenue neutral.
"This tax plan puts working families first," Greitens told a crowd of dozens of people in Macon. He added that it will "reward businesses that build and hire people here in the state of Missouri."
Democrats quickly expressed skepticism with the plan.
"Despite a strong economy and low unemployment, Missouri is enduring a second straight year of deep state budget cuts because Republicans put granting large tax cuts to their wealthy donors ahead of the financial stability of the state," House Minority Leader Gail McCann Beatty said in a statement. "The governor's proposal would only serve to make the state's financial crisis far worse than it already is."
There is currently a federal earned income tax credit worth up to $25,000 for single filers and $30,000 for joint filers, depending on income and the number of children in a family. Greitens wants to expand that credit for low-income workers by offering a nonrefundable state tax credit worth 20 percent of what people already are getting under the federal program. He has said that would essentially eliminate income taxes for 380,000 people.
Greitens said the tax cuts would be offset in part by ending a 2 percent discount for businesses if they file withholding taxes on time and by eliminating a program that allows multistate corporations to choose how their taxable income is calculated. The governor instead wants to tax corporations based on their ratio of in-state sales compared to total sales.
The governor's plan also would mean businesses no longer could deduct half of their federal corporate income taxes from state taxes, and it would phase out a similar deduction for individuals making more than $25,000 a year. Greitens is calling to completely eliminate the tax break for those making more than $150,000 a year.