Missouri House passes $1 billion tax credit bill on to the Senate

April 25, 2022

BY TEGHAN SIMONTON

Missouri News Network

JEFFERSON CITY — A controversial House bill allocating $1 billion in tax credits passed out of the Missouri House on Thursday and is now headed 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 committee and on to the full House, after it was introduced less than two weeks ago.

Critics also worry the promises made in the bill are not realistic with the amount of money allocated, and the bill would give nothing at all to low-income residents.

House Budget Committee Chairman Cody Smith, R-Carthage, the bill’s sponsor, said the credit would utilize some of the record surplus that the state has accumulated in general revenue.

“To me, that means it’s time to give some of those dollars back to those that paid it in, especially when they’re facing challenges due to inflation and various economic factors,” he said.

In a committee hearing last week, Department of Revenue staff said the bill, as it was written, would be a “huge administrative hurdle.” The department would need to set and enforce a deadline for residents applying to receive the credit or risk running out of the money. That deadline would likely be in mid-October, the extended tax filing deadline, said Zach Wyatt, the legislative liaison for the department.

Wyatt also predicted call centers would become “inundated” with complaints and confused residents when they did not receive the full tax credit. According to estimates from the Division of Budget and Planning in the Office of Administration, if the $1 billion is divided among all eligible residents, the maximum credit for a single person will be $378.66.

Smith said in committee that there were options to address these concerns, including raising the allocation above $1 billion or lowering the maximum amount from $500. On the bill that was passed Thursday, however, no such changes were made.

House Democrats called the bill deceptive, given that it’s likely no resident will receive a full $500 credit.

“This is a political scam, and I’m frustrated by it,” said Rep. Peter Merideth, D-St. Louis, ranking minority member of the House Budget Committee. “I’m frustrated by it, and I think Missourians ought to be, too, because they’re being lied to.”

Because the credit is nonrefundable, Democrats also worried it would not apply to those who are exempt from paying income tax because they make little to no money each year, such as retired senior citizens 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.

Those concerns are shared by the Missouri Budget Project, a nonprofit that advocates for budget policies that benefit low-income residents.

“The taxpayers who won’t get this rebate are the very ones who pay the highest portion of their income in state and local taxes,” said spokesperson Traci Gleason. “We’re hopeful that if the Senate considers HB 3021 or other tax rebate proposals in the remaining weeks, senators will prioritize — or at least include — the Missourians most struggling to afford gas and put food on the table.”

Republicans defended this aspect of the bill. Rep. J. Eggleston, R-Maysville, said the credit is intended for those “who have actually earned it in a sensible way.” He listed various social services programs including food stamps and Obamacare and argued they have not met their objective of ending poverty in the U.S.

“We’ve found all sorts of ways to take from those who have earned, to give away to those who have not, in an effort to try to contrive an outcome,” he said. “I can assure you if we teach folks how to fish, they will be better fed.”

Rep. Shamed Dogan, R-Ballwin, added that the House has in the past approved bills that offer credits to some — but not all — Missouri residents. He argued that the fact the credit would not be provided to everyone shouldn’t prevent it from being approved.

“You don’t oppose a tax credit or oppose helping people out just because it doesn’t help everybody,” Dogan said.

The bill passed by a vote of 103-44 and is now headed to the Senate, where leadership said it was too soon to tell whether it would gain approval.

“I think the idea of giving money back to taxpayers because we are so flush is not 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 actually aimed at the right folks? I think all that is really important. We’ll take a look at it once it’s over here.”

Sen. John Rizzo, D-Independence, said he believes the nonrefundable aspect of the bill misses the target of helping Missourians with the most need. He noted that disagreement over the bill truly stems from a fundamental divide between Republicans and Democrats over the role of government in the economy and social services.

“That’s just the different approach that we have as Democrats and Republicans,” Rizzo said. “They believe that money trickles down, and we believe it starts from the bottom.”



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