It's Like Sen. Kraus WANTS to Make Missouri More Like Kansas.

Earlier this week, Sen. Will Kraus doubled down on slashing the corporate income tax. 

From the AP

A Missouri lawmaker says Republican President-elect Donald Trump's promises to slash corporate income taxes could lend momentum to his proposal to eliminate the taxes completely in the state, a move that would make Missouri one of few states without business income taxes.

Republican state Sen. Will Kraus told The Associated Press that Trump's support for reducing such taxes could open the door to axing corporate income taxes on the state level. Kraus will introduce a bill during the next legislative session beginning in January that would phase out the state's current 6.25 percent corporate income tax.

"I see an opportunity for us to be able to market Missouri as a corporate tax-free state," Kraus said. He called the measure a "job-creation" bill.

Under Kraus' bill, the tax would drop to 4 percent in 2017 and 2 percent in 2018. It would be eliminated in 2019.

We've already seen the impact of cutting the corporate income tax. It's called Kansas.

The Kansas experiment is a real life supply-side economic experiment. Brownback implemented dramatic cuts for business and high-earning individuals in 2012, assuming a "shot of adrenaline into the heart of the Kansas economy" would create thousands of jobs and boost funding for schools and local governments.

That did not happen. Instead, Kansas has experienced four years of budget crises, underscored by borrowing $900 million to run the state, job loss, extreme budget cuts to education, transportation, and social services. Since 2013, total employment in Kansas has risen only 2.6 percent, compared to 6.5 percent nationally; private sector employment in Kansas has risen 3.5 percent, compared to 7.6 percent nationally.

But Sen. Kraus is right, we don't need corporate income taxes. He would know: his SB 19 legislation from 2015 was the first round of corporate income tax cuts, and it is only supposed to cost the state $15 million

Oh. Wait. 

From St. Louis Public Radio

Missouri’s acting state budget director Dan Haug blames lower tax payments from corporations as the chief reason state income is continuing to lag behind what’s needed to fully fund its current budget. 

Haug says corporate tax collections have dropped by more than 35 percent in less than two years.He ties the tax decline to a legislative change a couple years ago in Missouri’s tax laws that deal with how multi-state corporations split their profits, for tax purposes, among the states where they operate.

The change has allowed businesses to report less income in Missouri, which means they pay less in taxes.The state collected roughly $400 million in corporate taxes in fiscal year 2015, Haug said, but that dropped to about $280 million last year. 

According to a "budget veteran", SB 19 actually cost the state 200 million. Missouri h as the added burden of the Hancock Amendment. We can cut all we want, but adding new taxes requires voter approval. Once we've dug ourselves into a financial hole, it'll be difficult to pull ourselves out.

Arthur Laffer, an ALEC economist who popularized the tax policy, has dubbed California a "Business Unfriendly" state. California is leading the states in economic growth. With a gain of 2.9%, that was the best 12-month record of any large state except Florida, which won by a nostril with a gain of 3%, and much better than the nation as a whole (1.7%). According to the congressional Joint Economic Committee, California leads the nation in growth in its gross domestic product, which grew by 4.2% in 2015 — twice the national rate. Maybe we shouldn't subscribe to just his model for growth. 

Lastly, at a time when 1 in 5 Missouri children are food insecure, MODOT is woefully underfunded and the General Assembly hasn't pushed for a solution, and the public education funding equation needs over $400 million to satisfy the basic needs for all students, why is continuing to cut potential revenue a priority?

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