JEFFERSON CITY — The Missouri General Assembly’s newest plan to bring in money for the state introduces new taxes on out-of-state sellers but lowers taxes for those in the top tax bracket.
House Bill 548, sponsored by Rep. J. Eggleston, R-Maysville, which narrowly received initial approval from the House on Tuesday, would make three major changes to taxes in Missouri.
It would cut the top income tax by 0.14 percent at the beginning of 2020. Then, over the next two years, the tax rate would increase or decrease depending on how much revenue the state brings in — sort of like a pendulum. When Missouri doesn’t hit a certain revenue target, the top tax income rate would increase in increments of 0.05 percent to try and make up for it. The rate would decrease in increments of 0.05 percent if Missouri brings in enough money.
The Committee on Legislative Research Oversight Division and the Missouri Budget Project both estimate the state will lose around $74 million when the bill is fully implemented. The Oversight Division thinks the state could lose more.
While the first part of HB 548 takes money from the state, the second and third parts bring some in — but not enough to make up for the tax cut — by introducing a sales tax for sellers without a physical presence in Missouri who either sell more than $100,000 worth of goods every year or make more than 200 business transactions.
“Marketplace Facilitators,” like Facebook Marketplace, Ebay or Etsy, would have to pay the same tax. That’s an extra 4.225 percent added onto online prices.
The bill is one of several proposed after last year’s U.S. Supreme Court decision, South Dakota v. Wayfair Inc., which allows states to levy state sales taxes on businesses without a physical presence in individual states.
“I asked numerous witnesses in committee if they believed the passage of an internet sales tax would lead to improving business for our brick-and-mortar stores, and they all believed some buyers would buy more locally if we passed a Wayfair-based bill like this one,” Eggleston said.
“We’re creating penalties for people being innovative,” said Rep. Brandon Ellington, D-Kansas City, who opposes the bill. “When we talk about business owners, a business in a free market is always supposed to be about innovation, simple and plain.”
One of the reasons some lawmakers oppose HB 548 is because the usual 1 percent share of sales tax that would go toward the School District Trust fund does not go there for these online sellers. That money would instead go to the general revenue fund.
The vote to move HB 548 on to the next level was incredibly close, passing 78-72.
Democratic Rep. Deb Lavender, D-Kirkwood, attempted to kill the income tax rate part of the bill by adding an amendment that prevented the cut from happening if any bridges needed repairs, if higher education is not properly funded, or if there is not enough funding for Missouri’s public defender system, among other things. That amendment was shot down.