Today’s report from Missouri’s State Auditor shows that Missouri is continuing to decline in the revenue strength needed to withstand stresses like the current COVID-19 pandemic and economic downturn. It is time that legislators take a serious look at Missouri’s unfair, outdated and inadequate personal income tax system. When “the common good” is inadequately funded, our state is unable to educate K-12 and university students, respond to health and mental health needs, or invest in workforce development.
Missouri’s tax table is largely stuck where it started in 1931, other than small adjustments to the top tax bracket made in tax cuts bills of the past decade. The net impact of our outdated system, in combination with the Hancock Amendment and other features of Missouri’s tax laws, is that bottom one-fifth of Missouri non-elderly households are severely disadvantaged. Those with incomes of less than $17,800 pay far more in taxes as a share of their income than the richest one percent. That bottom fifth pay 9.9 percent of their incomes in state and local taxes, as compared to 6.2 percent for households making more than $447.300 annually. For the exact breakdown by income level, go to: https://itep.org/whopays/missouri/
The General Assembly has repeatedly passed tax reduction bills, whether tax credits or tax cuts, forcing governors from both major parties to make deep cuts to essential programs and services. Gov. Parson’s has had to do this repeatedly in 2020, due to the pandemic fueled economic downturn. Rather than reducing taxes paid by most Missourians, the cuts passed by our General Assembly simply shift to whom we pay and how we pay them – as municipalities and school districts turn to local taxes and bond measures to finance the essentials that our communities need to succeed.
State Representative Judy Morgan (District 24, Kansas City) has sponsored the Tax Justice for a Healthy Missouri tax reform bill for several years, and she has not even received a hearing. HB 2619 was her most recent attempt in 2020, a bill that was assigned to committee on May 15, the final day of the Legislative Session. A thorough review of this proposal is long overdue.