RELEASE: Governor Greitens Promotes Tax Relief for Working Families on State Tour

Today, Governor Eric Greitens announced the details of his plan to cut taxes for working families and win more jobs for Missouri.

“This tax plan puts working families first, and it’s a better deal for all Missourians because it rewards businesses for hiring people in Missouri,” said Governor Greitens.

“For 380,000 working-class Missourians, this plan would cut taxes to $0.00. This plan cuts taxes for 97% of all Missouri taxpayers. It will help us win new businesses, and stop chasing jobs out of Missouri.

This is a bold and responsible plan. We believe it is the most well-researched, thoughtful state tax reform effort in America, and I’m proud to lay it out for you in detail. I’m looking forward to working with the legislature and people across our state to get tax relief for Missouri families.”

The Governor is traveling to Macon, Palmyra, Jackson, Springfield, Joplin, and Kansas City in a series of stops to promote these tax cuts for working families.

The plan results in tax cuts for 97% of Missouri taxpayers, as a result of bold rate cuts to personal income taxes and the implementation of the “Workers First” tax cut. It also increases our ability to win jobs for Missouri workers by improving Missouri’s corporate tax environment.

In summary, this plan would:

  1. Cut the top personal income tax rate from 5.9% to 5.3%.
  2. Implement a “Workers First” tax cut, a non-refundable credit against tax liability equal to 20% of the federal earned income tax credit.
  3. Cut the corporate income tax rate from 6.25% to 4.25%.
  4. Eliminate certain unnecessary tax breaks and close loopholes to make this tax reform effort revenue-neutral.

The combined effect of those moves results in the following:

– Tax cut for 97% of all Missouri taxpayers.

– Tax burden eliminated for 380,000 working-class Missourians.

– The 2nd lowest corporate income tax rate in the country, of states that have a corporate income tax.

In order to responsibly achieve these results, Missouri should eliminate or alter some tax breaks that are outdated, unfair, or unnecessary, and close loopholes in the tax code. This tax plan boldly cuts taxes for nearly every Missouri taxpayer and dramatically improves Missouri’s tax environment for businesses. It is also revenue-neutral according to an analysis from the Department of Revenue. By eliminating these breaks and closing these loopholes, Missouri families and businesses will see a tax cut and Missouri’s budget will not be unduly burdened. The alterations to tax breaks and loopholes are laid out in detail in this document.


In order to gauge the impact of this plan on Missouri families, the Department of Revenue ran 7,000 different scenarios through our tax system and measured the results of this plan on each. Based on those scenarios, 97% of all Missouri taxpayers would see a tax cut. The greatest results are for working-class families: 380,000 Missourians will see their tax bill reduced to $0.00. Some examples are highlighted below:

Married Parents of Two making $30,000:

Current taxes due: $348

Proposed taxes due: $0

Tax Cut: $348 or 100%


Single Parent of Two making $30,000: 

Current taxes due: $788

Proposed taxes due: $153

Tax Cut: $635 or 80.59%


Married Parents of Two making $40,000:

Current taxes due: $920

Proposed taxes due: $449

Tax Cut: $471 or 51.24%


Married Couple with no children making $48,000:

Current taxes due: $1,620

Proposed taxes due: $1,514

Tax Cut: $106 or 6.53%


Married Parents of Two making $150,000:

Current taxes due: $6,917

Proposed taxes due: $6,716

Tax Cut: $201 or 2.91%


Details of the Working Families Tax Relief Plan

Personal Income Tax Rate Reduction: This tax plan reduces the top personal income tax rate from 5.9% to 5.3%.

Missouri’s current individual income tax rates were implemented in 1971, when the average wage in the United States was slightly over $6,400. Any Missourian who earns more than $9,072 annually is in the top income tax bracket. This tax rate cut would affect nearly every Missouri taxpayer. By going from 5.9% to 5.3%, we are cutting the personal income tax rate paid by most Missourians by 10%.

“Workers First” Tax Cut: This tax plan implements a “Workers First” tax cut, based on the earned income tax credit model, to maximize tax cuts for working-class families.

The federal government and many states provide an Earned Income Tax Credit (EITC) which offsets some regressive effects of tax policy while encouraging individuals to find jobs-rather than rely on the welfare system. The Tax Reduction Act of 1975 introduced the EITC at the federal level and was expanded by President Reagan in 1986.

At the federal level, the EITC serves as a refundable tax credit for working families. In order to qualify for the program, individuals are required to participate in the workforce and the greatest rewards go to low-income working parents. The EITC can supplement income, but unlike many other programs designed to benefit low-income citizens, it incentivizes work. The credit awarded also decreases as taxable income increases-unlike other government programs that sharply cut off benefits at a certain income level. It is regarded by researchers across the political spectrum as one of the most effective anti-poverty programs in the United States.

To be eligible, single filers must make less than $15,310 (no children), $40,402 (one child), $45,898 (two children), or $49,298 (three or more children) while joint filers must collectively make less than $21,000 (no children), $46,102 (one child), $51,598 (two children), or $54,998 (three or more children). Maximum federal credits for these families are: $6,444 (three or more children), $5,728 (two qualifying children) $3,468 (one child), or $520 (no children). The actual credit varies as the taxpayer’s income interacts with the number of children, but in general the credit grows until it reaches its peak at about $25,000 for single filers and $30,000 for joint filers.

Using the EITC model, to ensure that the greatest benefits go to working families, Missouri should implement the Workers First tax cut. This would serve as a non-refundable credit against tax liability at 20% of the allowed federal EITC. In simple terms, a person who is eligible for the federal EITC would also get an amount equal to 20% of their federal EITC off of their state tax bill. This would allow lower-income workers to increase their take-home pay and make Missouri’s tax system more favorable for working families.

Corporate Income Tax Rate Reduction: This tax plan would cut the corporate income tax rate in Missouri from 6.25% to 4.25%.

Missouri currently requires a 6.25% flat tax on all corporate income. This makes us approximately middle of the road in terms of corporate taxation relative to our peer states. 44 other states have corporate income taxes. Four other states have a different way of taxing corporations, known as the gross receipts tax. Of the 44 states with a corporate income tax, 17 states currently have a top rate that is more competitive than Missouri’s.

Lowering the corporate tax rate to 4.25% would give Missouri the second-lowest corporate income tax rate in the country among states that have a corporate income tax. It would make Missouri’s corporate tax environment one of the five best in the country.

For most businesses, corporate tax environment is among the first considerations when deciding where to invest. Many factors contribute to the final decision, but unless the corporate tax environment is competitive the state is not even considered. Missouri is currently losing jobs to states with more favorable corporate tax environments and needs to improve to stay competitive. This change in the corporate tax rate can be a major selling point as Missouri competes for jobs.

Changes in Missouri’s Tax System to Achieve Revenue-Neutral Tax Reform:

In order to cut taxes in a way that is fiscally sound, maintains our state’s AAA credit rating, and does not burden our children with debt, our team has worked hard to develop a tax cut plan that is revenue-neutral. 97% of Missouri taxpayers will see a tax cut. Businesses will see a lower rate and more favorable corporate tax environment. At the same time, by eliminating special breaks and loopholes in Missouri’s tax system, we can find alternative ways to ensure that Missouri’s revenue stays steady. Rather than have a few businesses or corporations get a break, we should lower the rate for all Missouri taxpayers. The following recommended changes in Missouri’s tax system would offset the revenue lost by lowering taxes on families and businesses. The result is revenue-neutral tax reform that cuts taxes for Missourians without breaking our budget.

Eliminating Timely Filing Discounts:

Missouri currently offers a 2% discount to businesses for filing withholding taxes on time. Missouri is one of the only states in the country to provide an uncapped discount as high as 2% to vendors for filing sales taxes on time.

At one time in history, it was a great difficulty for businesses to manually calculate and send their sales tax to state and local governments.  This discount was intended to factor those difficulties into the tax collection system, and reward those who paid their taxes on time. Today, with modern technology, paying taxes on time is the norm, not the exception.

In effect, Missouri’s tax system rewards businesses for doing what they are required to do by state law. Families do not see a similar discount for following the law, and the issue that this attempts to address is not relevant in today’s modern economy. These discounts complicate the tax code and offer no competitive advantage to Missouri. The Withholding Tax Timely Filing Discount and Vendor Timely Filing Discount should be eliminated, in favor of a simple reduction in tax rates.

Single Sales Factor Apportionment:

Today, Missouri is one of the few states in the country that allows all multistate corporations to pick and choose how to calculate their taxable income. The unintended result of our system: Missouri collects drastically lower revenues and multistate companies have an incentive not to hire more Missouri workers or invest in more Missouri property.

For corporations that do business in multiple states, each state has to determine what portion of a corporation’s total income they will tax. The two predominant methods of corporate income apportionment are three-factor apportionment and single-factor apportionment (also referred to as Single Sales Factor).

Under a three-factor system, states combine three ratios: in-state capital/total capital, in-state payroll/total payroll, and in-state sales/total sales. The resulting ratio is the percentage of total corporate income that the state would tax. Contrarily, under Single Sales Factor, the percentage of a corporation’s income that is taxable is the ratio of in-state sales/total sales.

Missouri currently allows all corporations to choose either three-factor apportionment, Single Sales Factor, or a modified single factor apportionment. Missouri is the only state in the country that does this.

Right now, multistate corporations that invest and hire workers in other states-outside of Missouri–can be rewarded and pay less in Missouri taxes than if they had invested and hired workers in Missouri.

Therefore, we should require all corporations to use Single Sales Factor. This will not only simplify our tax code, it will also incentivize hiring and investment in Missouri, instead of paying companies to invest in our neighbors.

Federal Income Tax Deductions: 

Right now, corporations in Missouri may deduct 50% of their federal corporate income tax from their state corporate income tax. Only a handful of other states offer a similar deduction, as most states realize that a lower tax rate offers a greater competitive advantage than a deduction. Missouri is also one of only five states to allow individual taxpayers to deduct federal income tax paid from state taxable income. More than half of the total benefit of this deduction goes to the richest fifth of Missouri taxpayers.

These deductions add complexity to the tax code, preventing Missouri from collecting income tax in the most efficient manner possible. Repealing the state corporate income tax deduction would simplify the tax code by eliminating a step in tax preparation. It would also help Missouri to responsibly lower the corporate tax rate, which will prove to be a greater advantage to businesses and help Missouri win more jobs.

The federal individual income tax deduction should be altered to reduce the complexity of Missouri’s tax code and in favor of lower individual income tax rates. Rather than simply eliminating this deduction, it should be phased out as income rises, to ensure that working class families receive the greatest possible net tax cut. Under this plan, the deduction would phase out as follows:

-Taxpayers with Missouri adjusted gross income of up to $25,000 may claim 100% of the deduction;

-Taxpayers with Missouri adjusted gross income of up to $50,000 may claim 75% of the deduction;

-Taxpayers with Missouri adjusted gross income of up to $100,000 may claim 30% of the deduction;

-Taxpayers with Missouri adjusted gross income of up to $150,000 may claim 10% of the deduction;

-Taxpayers with Missouri adjusted gross income of over $150,000 may not claim any deduction.

Streamlined Sales and Use Tax Agreement:

Every state in the nation that collects sales and use tax is limited by the 1992 U.S. Supreme Court decision, Quill Corp. v. North Dakota. In Quill, the Supreme Court held that states may not collect use tax from remote sellers who do not have a physical presence in that state. According to the National Conference of State Legislatures, states lost an estimated $23.3 billion in 2012 from not being able to collect use tax on out-of-state online and catalog purchases. Specifically, Missouri lost an estimated $210.7 million due to uncollected use tax on remote purchases during that same timeframe.

Since then, internet sales have continued to grow. Many states are looking for new and proper ways to collect tax on remote sellers who sell into their states. Some states are challenging Quill in state and federal court. Some are changing their reporting requirements. Some are waiting for Congress to act.

Some states have addressed the problem by entering into a multi-state agreement called the Streamlined Sales and Use Tax Agreement. The website of the Streamlined Sales Tax Governing Board notes, “The Agreement minimizes costs and administrative burdens of tracking retailers that collect sales tax, particularly retailers operating in multiple states.” The Agreement: “encourages ‘remote sellers’ selling over the Internet and by mail order to collect tax on sales to customers living in the Streamlined states. It levels the playing field so that local ‘brick-and-mortar’ stores and remote sellers operate under the same rules.”

Twenty-four states fully comply with the Agreement, including six of Missouri’s neighboring states.

Right now, out-of-state retailers who sell their products on-line into Missouri have an unfair advantage over Missouri retailers. Missouri should join the Streamlined Sales and Use Tax Agreement to realize revenue from remote sellers and level the playing field for local Missouri retailers.

163 thoughts on “RELEASE: Governor Greitens Promotes Tax Relief for Working Families on State Tour

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