Eliminates the individual income tax
If enacted, SB146 will have significant implications for Missouri's revenue system. The implementation of reduced tax rates could lead to an overall decrease in state revenue, impacting funding for public services and programs. The bill ties future tax reductions to specific revenue thresholds, which means reductions are conditioned upon increased collections over previous fiscal years. Supporters of the bill argue that lowering taxes will stimulate economic growth and attract new residents to the state, though critics express concern that reduced funding could harm essential state services.
Senate Bill 146 aims to repeal section 143.011 of the Revised Statutes of Missouri and replace it with a new section designed to modify the state's income tax structure. The bill introduces a new tax rate schedule that generally reduces the income tax burden on residents, particularly by adjusting tax rates to progressively lower thresholds. The top tax rate is set to be gradually reduced to 4.95% for tax years starting from January 1, 2023, with the expectation that all income taxes will eventually be eliminated for tax years beginning on or after January 1, 2026.
Discussions around SB146 reveal notable points of contention among lawmakers and stakeholders. Proponents see this as a favorable reform promoting economic activity and easing the financial burden on individuals. However, opponents worry about the long-term viability of state funding, emphasizing potential cuts to education and healthcare programs due to reduced income tax revenue. This tension between fostering economic growth and maintaining essential public services is a key theme in the ongoing discussions about the legislation.