House adds tax cut to mental retardation bill

JEFFERSON CITY - State individual income tax would permanently decrease under a bill passed by the Missouri House Thursday.

Under the bill, the income tax would drop by a half-percentage point to 5.5 percent from 6 percent.

House Republicans originally sought a two-year tax cut, saying it would be offset by $1 billion in expected federal stimulus funds. The stimulus funds are intended to stabilize state government programs and create jobs through state building projects.

On Thursday the tax cut was expanded to be permanent. It would cost the state an estimated $463 million in unrealized income tax each year. The vote was along party lines, 86 to 66.

House Speaker Pro Tem Rep. Bryan Pratt, R-Jackson County, said the stimulus funds would supplement the money the state would have received without the tax cut. He said hopefully the economy will turn around before the stimulus funds run out.

"We think a permanent tax cut is better for the state of Missouri," Pratt said. "It's a good day for Missouri taxpayers."

House Republicans said it is better to allow taxpayers to stimulate the economy instead of doing it through the government. They have called the rush to spend the federal stimulus money as a "feeding-frenzy" and say it is better to give the money to voters.

"We're in the nanny state where the government is expected to do everything," Rep. Tim Jones, R- St. Louis County, said.

Pratt defended the tax cut proposal against Democratic charges that stimulus money cannot be used that way. He said the cut would not directly be paid for through stimulus money.

"No tax cut bill ever says what fund it's coming out of," Pratt said. "It's not coming out of a state fund; it's money not coming to the state."

The tax cut was attached to a bill that would create an unrelated tax-credit program for donations made to developmental disability care providers. Senate Republicans and Democratic Gov. Jay Nixon have voiced doubts that the tax cuts will make it through the legislature this year.

The bill was approved by the Senate before the tax cut was added. It must be considered again in the Senate before it can be sent to the governor's office.

Citing struggles to agree on the budget, Minority Leader Rep. Paul LeVota, R-Independence, called the move "the culmination of the circus that this session has become. Here's the main event, the GOP desperation act of 2009."

The legislature has until May 8 to send a state budget to the governor's office. On Thursday a bill to spend stimulus dollars on large state projects was defeated by the House.

House Democrats criticized the cut saying the money should be used to shore up state programs like education.

Rep. Jeff Roorda, D-Barnhart, said only the rich would benefit from the tax cut at the expense of state programs.

"How do we fund health care? How do we fund social programs?" Roorda said. "This gentleman wants to bankrupt the state to the benefit of the wealthy among us and say, 'Oh, it'll be OK gentlemen, they'll just spend it, and it'll trickle down and our economy will be booming' and we all know it's another crock of baloney."