I have not been shy about criticizing Missouri’s lack of movement toward real, substantive tax reform. Now, Kansas has beaten us to the punch. Kansas Gov. Sam Brownback has signed into law a tax cut package that eliminates Kansas’ three personal income tax brackets and replaces them with two new ones, at 3 and 4.9 percent. This new top marginal tax rate is lower than Missouri’s top personal income tax rate, which is 6 percent.
The tax cut will not be met with celebration in Kansas City, Mo., which already is in a bidding war with Kansas as it tries to keep businesses on our side of the border. In addition to the individual income tax cut, Kansas has changed how it taxes small business that will result in nearly 191,000 small businesses not paying income taxes. Any small business in Missouri must be interested in the prospect of not paying taxes on their non-wage income, and Kansas is not THAT far away.
What is Missouri doing in response? Not much. There were proposals in the 2012 session of the Missouri Legislature to cut personal income and corporate income taxes, but they did not pass. While Kansas moves forward in making itself more competitive and attractive to businesses, we are stuck carrying out business as usual. Considering the fact that Missouri is falling behind the rest of the nation in economic performance, something has to change. Alas, we can take our quantum of solace in the fact we are not making things worse, like they are in Illinois.
