Missouri is not alone in wanting to give its economy a boost in 2012. But what is the best way to do it? As Missouri Gov. Jay Nixon’s (D) State of the State address approaches on Tuesday, it might be useful to take a look at what some of our neighbors are doing. Recently, Kansas Gov. Sam Brownback (R) unveiled his proposal for tax reform in that state.
Highlights of the Brownback Plan include:
- Lower the top individual income tax rate from 6.45 percent to 4.9 percent (Missouri’s is 6 percent).
- Double the standard deduction to $9,000 for head-of-household filers.
- Eliminate various tax breaks, including those for home mortgages and earned income.
- Eliminate individual income taxes on non-wage business income like limited liability companies.
- Preserve the 1-cent state sales tax.
Now, the plan is described as “close to revenue neutral” and the article quotes a legislator who states “the devil is in the details,” and I happen to agree. However, this proposal points Kansas in the right direction. Any attempt to lower tax rates and broaden the tax base (i.e., closing loopholes and ending tax breaks) should be commended. Is Missouri going to follow (Kansas is not alone in proposing tax reform; Nebraska also is looking at cutting taxes)? State officials in Jefferson City have the opportunity, with the new legislative session, to make some serious changes and set Missouri on the right path to compete economically.
At the Show-Me Institute, we have proposed various tweaks in the state’s tax code that could be beneficial and make the state more competitive. Is Missouri going to move down this road, or are state officials going to continue promoting economic development debacles like Mamtek (and other projects that should remain dead), which make for good photo-ops but have resulted in a failure to grow Missouri’s economy?
