10 Aug Missouri Cuts Taxes, Reforms Pensions, Takes First Significant Policy Steps Towards Growth

Missouri Works Towards Growth By Cutting Taxes And Reforming Pensions

It can be difficult to find good, political leadership in the states these days. Thankfully, in Missouri there are steps being made to grow both fiscally and responsibly. There are some who are opposed to this, however, and are taking bad positions on the idea of the growth. The debate over these changes started taking place two years ago when each side of the house of chambers showed exemplary vision and leadership through the passing of a historic income tax reform. They also made history by overriding the governor’s veto on this legislation. Senate Bill 509 has proven to be Missouri’s most notorious tax reform in more than a century.

The new tax law set in motion both personal and business tax reductions after Missouri successfully meets certain revenue gains. The state exceeded the specific revenue in the fiscal year of 2017 and hardworking people in Missouri will benefit in a multitude of ways because of this new tax bill.

Benefits To Hardworking People In Missouri Because Of New Tax Bill

•There will be a reduction of one-percent in personal income tax rates every year after a net gross of revenues are collection that exceed or meet the $150 million dollar mark. This is set until the rate gets reduced from six-percent down to five and a half percent.

•There will be a twenty-five percent reduction for smaller business income which is filed by individual tax returns. This will be phased into use over five years after a net gross revenue of collections is met or exceeding above the $150 million dollar mark.

•People in Missouri who have an adjusted gross income that is less than twenty-thousand dollars are going to be able to claim an additional tax deduction of around $500 annually.

•To cover for inflation, the taxable income brackets will be adjusted.

The Missouri state senator is Eric Schmitt. He supported the new legislation while he was the current state senator. He had a few things to say about the new reforms. He said that small businesses represent almost 97% of all businesses in Missouri and they have struggled for many years to stay open for business because of the burdensome regulations and excessive taxes. Finding newer ways in which to offer the small businesses relief while letting hard working people in the state get some much needed tax breaks to keep more of the money they earned will help to strengthen the economy. As for the middle class working families, the new tax relief can result in more financial empowerment, more flexibility to address family financial needs and more take-home pay.

A dependable fiscal management doesn’t just rely on pro-growth taxation policies alone. During the last year, the looming public employee’s pension fund was beginning to head towards ruin in Missouri. Thankfully, the leadership in the state saw that there was some serious lack of funding going towards the state pension system which posed a long-term affect and threat towards its AAA credit rating. This month, the governor signed the new tax law reforms in an effort to take an important step forward to help get the state’s Employee Retirement System stabilized. Currently, the benefit program was being underfunded by around thirty-six percent.

Schmitt had recently issued a call for some reform in the pension system. He warned that without making changes the state would follow after the budget disaster in Illinois. Decades of budgetary neglect, government expansion, and unaddressed liabilities in the pension system have left the Illinois’ budget system in shambles. Some, however, are calling Schmitt’s claims to compare Missouri to Illinois as meaningless.

Aside from these claims, there are many state employees that are going to be very pleased learning that the new tax laws will create an early benefit buyout program which will allow many of the current state employees the option to qualify for pension benefits in around five years instead of ten years. Additionally, the former workers of the state will be able to cash in their future pension payments earlier as well. These types of changes are far from meaningless to the hardworking employees and will go far to reducing the crisis in the state’s pension system which is currently set at a total of over $15 billion in underfunded pension liability.

Lack Of Support To Show Claim That Missouri Is Headed Towards Illinois Budget Crisis

There is not much in the way of evidence to support the claim that Missouri is headed towards a bad economy like in Illinois. Missouri was recently placed on a review list which could downgrade the credit rating of the state to a “junk” status. This action was taken because of a 32% increase in taxes which could ultimately increase the overall deficit of the state’s employee pension deficit by over $251 billion dollars. The IRS was tracking both state’s taxpayer income from 1992 to 2015. While Illinois lost over $45 billion in annual gross income, Missouri only lost around $2.9 billion. That is a big difference in the amount of lost annual gross income with is very far from a negligible concern for Missouri heading down a road to becoming like Illinois with their budget crisis.

In Illinois, they are losing workers in great numbers because of the state’s downward spiral. The action to cut taxes for small businesses in Missouri, along with great measures to help keep the pension for state employees solvent, will be two critical steps to take in order to keep Missouri’s economic state growing. In fact, at George Washington State University, the Mercatus Center had evaluated Missouri’s overall fiscal conditions. They ranked the state and the rank went from the 20th place to the 11th place. In comparison to Missouri, Illinois is ranking solid at 49th place.

No one knows just what all of this will essentially mean for Missouri. The state could be on its way to positioning themselves as a positive role model for economic expansion to which other states can look towards in the future.