n an address to the Missouri Press Association today, Gov. Jay Nixon announced "real progress" in discussions with legislative leaders on taxes. The following is an excerpt of the Governor's remarks, as prepared for delivery:
"I've never been opposed to making responsible changes to our tax code. In fact, I've cut taxes four times as Governor. Missouri now has the sixth lowest taxes in the nation.
But if we're going to cut taxes, I want it done the right way, in a way that protects investments in our classrooms and gives a break to folks who really need it.
Over the past several months we've had productive, substantive discussions with members of the legislature, including Senator Will Kraus and others, and this week we made some real progress.
Here is what I told members of the legislature about what I would look for in a tax bill:
First, we cannot jeopardize the best economic development tool we have: public education. To that end, I will not support any tax cut that prevents us from fully-funding the state's K-12 foundation formula. Period.
Second, a good way to make sure a tax cut for working families is affordable is to finally reform our state's most expensive -- and least efficient -- tax credit expenditures.
It's a question of fairness. For too long, these programs have allowed wealthy developers and special interests to reap massive windfalls at taxpayer expense. Let's give a break to the working families who need it the most by reining in handouts to those who need them the least.
Finally, I will not support tax gimmicks that reward creative accounting instead of a hard day's work. Some members of the General Assembly continue to propose cutting taxes on what's called "pass-through' business income. There's just one problem: these tax cuts primarily benefit well-heeled corporate partnerships like law firms, and there is no evidence, anywhere, that these schemes do anything to create jobs.
If the legislature is serious about giving tax relief to ordinary Missourians who need a break -- they need to shelve these giveaways to the lawyers and lobbyists who don't.
That's why I am pleased to report that Senator Kraus has indicated he plans to put forward a bill that would cut individual income taxes for working Missourians -- only after Missouri's K-12 foundation formula is fully funded and with significant savings from reforming our most costly tax credit programs, but without ill-conceived handouts to corporate partnerships.
Protecting and investing in our public schools, reining in wasteful tax credits that benefit special interests, and putting more money into the pockets of working Missourians. These are the basic elements of a sensible and sustainable tax bill that I would sign.
It's important to note that we're in the early stages of this process, and so I will continue to work in the days and weeks ahead to make sure that the legislation being proposed is not altered to compromise these principles.
And I've made clear to leaders that if a bill gets to my desk that violates these principles -- I will not hesitate to veto it. I said in my State of the State address that I would not support anything that takes money out of our classrooms -- and I meant it."
"This agreement will provide broad-based tax relief to the people of Missouri and protect funding for our public schools," said Sen. Will Kraus (R-Lee's Summit). "The principles upon which this agreement is based -- fully funding the foundation formula, reforming inefficient tax credit programs, and giving working Missourians a tax cut -- provide a solid framework for a bill that members of both parties can agree on. I appreciate the Governor's willingness to engage with members of the legislature on this issue and look forward to working with my colleagues to get this legislation to his desk."
The legislation that Sen. Kraus intends to put forward would provide a .25 percent reduction to the individual income tax rate effective only after the K-12 foundation formula is fully funded and only after $200 million in revenue growth. The legislation would provide an additional .25 percent reduction to the personal income tax rate effective after legislation is enacted to reduce low income housing tax credits to $110 million annually and historic preservation tax credits to $90 million annually.