The future of a one-time, non-refundable tax credit for some who paid Missouri income tax this year is uncertain.
Uncertainty includes whether Gov. Mike Parson will sign the bill and how much those eligible for the tax would actually receive.
Under the legislation, some Missourians who paid state income taxes would be eligible for a tax credit equal to the amount they paid to the state, up to $500 for single filers. or up to $1,000 for those filing jointly. Individuals earning at least $150,000 or couples earning $300,000 would not qualify for the credit.
In addition to passing the appropriation itself, the legislature added $500 million to the budget from general state revenues to pay for the appropriations.
“If we have the opportunity, I perceive it’s always a good idea to be able to send money back to taxpayers,” said Sen. Dan Hegeman, R-Cosby.
While the credit has received bipartisan support in the Senate, House Democrats have repeatedly spoken out against the credit, saying it does nothing to help Missourians who need it most but are ineligible. because they did not pay income tax.
“I absolutely don’t think it’s appropriate for us to give this money to other people and not to the lowest-earning third of Missourians,” said Rep. Peter Merideth, D-St. Louis, said.
But there are factors that complicate the amount a qualified person would receive from the state.
According to a tax memo attached to the bill in May, the Department of Revenue says the credit would automatically apply to those who qualify for it.
“Which means it’s not a situation where a lot of people forget to do it or don’t care and therefore more people make more money. It’s that anyone who qualifies will get it,” Merideth said.
Since the amount of money for credit is a fixed amount of $500 million, it will likely run out before everyone can collect the exact amount they would technically be entitled to.
This means that for everyone to receive at least part of their tax credit, the amount paid to each person or couple would likely be less than what they paid.
According to the original version of the appropriation, which allocated $1 billion in revenue to the state to fund it, Merideth said estimates from the Department of Budget and Planning indicated that when everything is divided, the higher amount a person would have received was less than $400.
But with a new pool of just $500 million to spend on credits, that new amount could be less.
“If we go by the $1 billion cap that says if everyone gets it, it’s $387 per person, that would suggest it would be less than $200 per person when you cut that cap in half. “, Merideth said.
The apportionment process, according to the tax memo, would likely begin in November.
But before that process can even begin, the bill must be signed into law by Parson, which is no guarantee.
At a bill-signing ceremony a few weeks ago, Parson expressed concerns about the tax credit, saying he felt it was put in place quickly and didn’t like some of its provisions, in particular the salary cap.
“I’m not sure I’m doing anything right now, just so I can take $500 million, and just be able to put it out there, and really what’s the responsibility for that,” Parson said.
While he doesn’t agree with all of Parson’s concerns about the bill, Merideth still hopes he will veto it.
“I hope common sense prevails and he says it hasn’t been well thought out. Frankly, we can figure it out again, if we have to do it in a better way. Or we can look for ways to spend that $500 million in a way that grows our state and invests in our state,” Merideth said.
Instead of a one-time credit, Parson said he would be more open to another income tax cut.
“I think we’re going to do something, and what I would probably call on lawmakers to do is lower everyone’s income tax, make it fair across the board. We can afford to do it now. And I think now is the right time to do it,” Parson said.
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