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Haahr puts Greitens’ tax cuts in motion

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State Rep. Elijah Haahr, R-Springfield, is sponsoring a bill that closely matches the tax code changes promoted this year by Gov. Eric Greitens.
House Bill 2540, if passed, would lower income and corporate tax rates, put a streamlined sales and use tax agreement in place, institute a single sales factor apportionment and other fiscal changes.

Greitens came to Springfield Jan. 30 to promote many of the same ideas.

Haahr’s bill, which has 23 co-sponsors, would require the state to enter into a streamlined sales and use tax agreement to help simplify sales collection from retailers in other states offering online and mail-order sales to Missouri residents.

Wisconsin-based nonprofit Streamlined Sales Tax Governing Board Inc. facilitates the tax-collection model for 24 other states. The organization works with contracted businesses to manage the collection of internet sales taxes for member states in return for a percentage of funds collected.

HB 2540 would also change the way corporations determine taxable income, by instituting what’s referred to as a “single sales factor apportionment.” In January, the governor pitched the idea, suggesting the tax code should favor in-state employment and investment from businesses by requiring companies to use only one of three tax-calculation rubrics currently available. He said businesses should be taxed based on a ratio of their in-state sales and total sales. This would eliminate the two other options that calculate taxes based on in-state capital verses total capital or in-state payroll compared to total payroll, options Greitens said favor out-of-state investments.

The corporate tax rate would drop to 5 percent from 6.25 percent beginning Jan. 1, 2019, if the bill is signed into law.

Haahr’s bill also would cut the top rate of income tax over a period of years from 6 percent to 5.5 percent, with each cut becoming effective if net general revenue collections meet a certain milestone. It also eliminates some tax brackets so that the top tax rate is 5 percent for all income more than  $7,000, indexed for inflation beginning in the 2020 calendar year. It also phases out the federal income tax deduction.

Haahr will be interviewed live June 19 during Springfield Business Journal’s 12 People You Need to Know series.

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