Brad Lager's Capitol Report: Strengthening Missouri’s Future

Since the opening day of the 2011 legislative session, creating an economic climate that facilitates job creation has been our number one priority. We are blessed that our great state continues to be a place where people want to live and raise their families. However, this cannot occur without high quality good paying jobs. While we have made many great strides already this session, we still have work to do in order to build the healthiest and most prosperous economy.

Every day, companies evaluate a number of factors when making decisions about where to locate their businesses. One of the most important factors is a state’s tax structure. For nearly 100 years, Missouri has levied a franchise tax on many businesses. We are one of the few states in the nation to still impose this additional tax. In order to make our tax structure more competitive, the General Assembly has passed a phase out of this tax over the next five years with it being completely eliminated in 2016. This will allow those businesses to keep more of their money to hire employees and reinvest in their companies.

The price and the reliability of energy are also major considerations when companies are looking to expand. Missouri’s energy generators do a great job of producing reliable power at a relatively affordable level. Although we have all seen increases in our monthly utility bills, the fact remains that Missouri has the 4th lowest rates in the nation. This makes Missouri an excellent choice for manufacturing companies and other businesses that have large energy needs. To ensure we retain this advantage in the future, Missouri will need a balanced energy portfolio which underscores why it is so important to have numerous energy generation options available to meet our future energy needs.

While taxes and utility rates are not the only concerns of business owners, they are significant costs that impact the growth and development of any venture. I believe that fair litigation, reasonable regulation and limited taxation is a formula that will encourage economic investment in our state. If successful, businesses will locate here and grow here, thereby creating new opportunities for the communities and people who live here.

As always, please feel free to call, email, or write with your ideas or concerns. The Capitol number is (573) 751-1415, my email is brad.lager@senate.mo.gov and my mailing address is Room 422, State Capitol Building, Jefferson City, MO 65101.

A Moment with Mike Thomson -- Redistricting the State

Last week the Missouri House tackled another big issue that thankfully does not have to be done often. Missouri is set to lose one of its nine congressional districts based on 2010 census data. While our state-wide population grew by 7 percent from 2000 to 2010, that growth lagged behind the national average. As a result we must reconfigure the congressional district boundaries in Missouri. The current districts were drawn to include approximately 621,000 people each. Because of population growth and the loss of one district, the new congressional districts will have a population of approximately 748,000 people each.

The Special Committee on Redistricting met throughout the state to take input from the public on this important issue. Their goal was to use a fair and open process to produce a map that would ensure adequate representation in Congress for all Missourians. It was no easy task as making a map that will please everyone is nearly impossible. However, the committee worked together in a bipartisan manner to produce the fairest map possible. The result is one that makes some significant changes to the way our state is divided, but does so in the most reasonable and responsible way possible.

While our area would remain in the sixth congressional district, the boundaries of the district would change significantly. Currently, the sixth primarily consists of Northwest Missouri. With the map proposed by the House, the district would expand to include all of Northeast Missouri as well. In effect, the sixth congressional district would be comprised of the northern third of the state. Of course, the map isn’t final as it still needs approval in the Senate, but this gives you some idea of the changes that may be in store as we do our best to create a fair and accurate congressional map for Missouri. If consensus is not reached between the House and Senate or the Governor rejects it, the final decision will be made by the Supreme Court.

If you are interested in looking at the map proposed by the House, it is available online in Google map format at the following link: http://www.house.mo.gov/largemap.aspx?map=1

In other action, the House gave final approval to a piece of legislation that will reduce the tax burden for many of our Missouri businesses. This legislation has already been approved in the Senate, which means it is now on the way to the governor’s desk to be signed into law.

The bill will gradually eliminate Missouri’s franchise tax on company assets such as buildings and inventory. The franchise tax has been in existence since 1917. While the legislature has reduced the tax over the years, leading business organizations have proposed doing away with the tax entirely as part of the “Fix the Six” legislative package that I discussed before. The bill we approved will reduce the tax each year until it is phased out entirely in 2016.

If you have questions, you may reach me at my Capitol number 573-751-9465, at the local district number, 660-582-4014, by email at mike.thomson@house.mo.gov or by mail at Room 401B State Capitol Building, Jefferson City, MO 65101

Casey Guernsey: Improving Missouri's Business Climate

by State Representative Casey Guernsey

Last week the House of Representatives took important action focusing on improving Missouri's business climate to adequately compete in today's markets. We passed out of the House my legislation putting an end to repeat nuisance lawsuits against farmers and agri-businesses. This is an enormous victory for those of us living in North Missouri and anyone in the farming business. The Senate also took quick action and passed Senator Lager's version of the same bill. The overwhelming super-majority lent to my legislation speaks volumes in and of itself; this is not a Republican or Democrat issue, this is a jobs issue. Anyone in agriculture today knows the threat of a lawsuit alone is enough to potentially put them out of business, it is imperative we send this bill to the Governor to keep Missouri's Agricultural sector the largest in the state. I urge you to contact the Governor's office in support of this legislation, his phone number is: 573.751.3222. If we do not, I fear it will be impossible for us to remain in the animal agriculture industry in Missouri thanks to literally 3 out of state trial attorneys who are manipulating our laws to line their pockets with tens of millions of dollars. His veto would also open the doors to further abuse of our nuisance laws to allow for the suit against any farmer regardless of commodity. We have all heard of farmers in other states being sued for harvesting after hours, stirring up dust, etc. We can not allow these attorneys the same option in Missouri.

The House also took swift action to end one form of double-taxation. Currently, Missouri franchised businesses are taxed both on their income and the value of their assets and stock. As an example this would be like getting taxed on your yearly income, and additionally on all the net income you've made your entire life. Missouri's additional tax on corporations is called the franchise tax. While Missouri has both corporate franchise and income taxes, many states simply have one or the other. As a result, when national corporations or smaller franchises are choosing where to locate, Missouri's double taxation scares them away.or pushes companies to re-locate outside of Missouri. By allowing businesses to keep its money, we know they will invest it in jobs right here in the Show-Me-State. The amount of money we will allow these corporations to save will be the equivalent of 1,700 jobs at $50,000 each. Cutting taxes is the best way to improve the job market for Missourians and I was very pleased to lend my strong support to this common sense legislation.

This session we have focused primarily on creating jobs in our state. We started the session with a plan to turn the state economy around by fundamentally changing the business environment and HB 76 is part of it. HB 76 phases out the state's franchise tax over a period of five years. Without the franchise tax, our state will become more attractive to businesses looking to move here and create jobs. Missouri collects less than 3% of its revenue from corporate taxes of any kind and the franchise tax is only part of this collection. In addition, Missouri entrepreneur's operate on a shoestring budget, and a little bit of tax here or there is the difference between hiring someone new or closing down. The elimination of the double tax will only help our small business owners. Join me in supporting HB 76 to eliminate corporate double-taxation. It's about attracting new businesses and creating new jobs. As always, feel free to contact me anytime with your thoughts or concerns. My phone number is 573.751.4285 and my email is Casey.Guernsey@house.mo.gov.

Missouri Senate Passes Bill to Eliminate Corporate Franchise Tax

The Missouri Senate gave second-round approval today to a measure that will help spur job creation in Missouri. Senate Bill 19, sponsored by Sen. Eric Schmitt, R-Glendale, would first freeze and then phase out Missouri’s corporate franchise tax over a five-year period. The bill now moves to the House for similar consideration.

“By limiting and then ending this double taxation on employers, we eliminate a disincentive that penalized companies for investing more in our state,” said Schmitt. “Now, companies can invest in hiring new employees instead of growing government through higher taxes.”

The measure would first limit and then end Missouri’s corporate franchise tax. The bill caps corporate franchise tax liabilities at the amount of each corporation's tax liability for the 2010 tax year. New businesses would be capped at the amount of their corporation's franchise tax liability for its first full year of existence. Then, beginning Jan. 1, 2012, the tax would be phased out over a five-year period.

Senate Leader Robert N. Mayer, R-Dexter, said putting Missourians back to work topped the Senate’s priority list for the 2011 legislative session.

“This bill is the first step to help put the more than 280,000 Missourians who have been out of work for the past year and a half back to work in good-paying jobs with benefits,” Mayer said. “By ending this double tax, we are making sure Missouri is competitive when it comes to bringing new investments and jobs to our state.”

Schmitt said Missouri is one of a few states that still charge businesses a tax just to expand or invest in this state. Kansas has been phasing out its franchise tax since 2007, and beginning in tax year 2011, it will be repealed altogether. Ohio began phasing in a new Commercial Activity Tax (CAT) in 2005, while simultaneously phasing out its corporate franchise tax.

Schmitt noted the change would make Missouri attractive to businesses currently looking to expand and, in particular, may lure businesses from Illinois where that state recently increases taxes on corporations.

“The corporate franchise tax is an outdated tax that is only still imposed in a handful of states,” said Schmitt. “While other states raise taxes on business in an attempt to close their budget gaps, we can set Missouri apart and make it clear that this is a place where businesses can expand and create jobs without being penalized.”

The corporate franchise tax is based on a percentage of a company’s assets. Corporations already pay income taxes on their earned income as well as sales and property taxes in Missouri.

To learn more about the bill, visit www.senate.mo.gov.