The 2004 STATE LEGISLATIVE SESSION
This proposal FAILED.
This proposed constitutional amendment prohibited appropriations in any fiscal year from exceeding the total state general revenue appropriations from the previous year by more than the appropriations growth limit. The appropriations growth limit is the greater of zero or the sum of the annual rate of inflation and the annual Missouri population growth.
See: http://www.house.mo.gov/bills041/bills/HJR49.HTM
The House Committee Substitute was voted "do pass" by the House Budget Committee by a vote of 12 to 11 with 1 present, on March 11, 2004.
The bill was never reported in to the full House for debate.
HCS HJR 49 was a serious threat to adequate funding for programs and services for Missouri citizens. It was sponsored by Reps. Lager, Beardon, and a host of other Republican representatives.
The proponents are not satisfied with the revenue limit of the 1980 Hancock Amendment, and the 1996 Amendment 4 that requires voter approval of any tax increase that exceeds $50 million, adjusted annually.
HJR 49 prohibited appropriations in any fiscal year from exceeding the growth of inflation and population changes plus 1%.
The courts have ruled that tax increases approved by the voters do not count in "total state revenues" under the Hancock Amendment. This means that when revenue growth is calculated to determine if the Hancock limit is exceeded, those revenues are not included. But HJR attempts to undo this ruling and specifies that revenues that result from a voter-approved tax increase WOULD be included in the appropriations growth limitation. It follows the Hancock amendment provision that requires refunds to INCOME TAX PAYERS (only) of any revenues that exceed the APPROPRIATION LIMITATION.
The threat posed by HJR was not limited. If it had been approved, it would have permanently damaged the state's ability to provide services and programs for Missourians. It appears to be part of the present General Assembly leadership's agenda to totally destroy the state's social welfare programs.
HJR 49 amended article IV of our state constitution that pertains to the Executive Department. (Hancock and Amendment 4 were changes in article X that pertains to Taxation. HJR 49 is simply a FURTHER RESTRICTION on the state's ability to meet needs, but attacks that ability from a different angle.
Last Update: 5/29/04
(The title above is our own. The proponents
call it: "Income Tax: Intangible Assets.") This proposal FAILED. This bill established a procedure
for the determination of tax liability for purposes of corporate
income tax of certain expenses and costs related to certain intangible
property when the property is transferred to a related entity. The bill provided specific criteria
for determining if transactional expenses and costs related to
the transfer and use of the rights to patents, trade names, trademarks,
and other intangible property incurred by a taxpayer from a related
entity are a legitimate business expense and are allowed to be
deducted in the computation of Missouri taxable income. Any issue relevant to ascertaining
the tax liability of a taxpayer related to the deductibility
of these expenses and costs would be strictly construed against
the taxing authority in favor of the taxpayer. The official fiscal note said that
the state would lose $86,569 in FY 2005; $0 in FY 2006, and $0
in FY 2007. See: http://www.house.state.mo.us/bills041/bills/HB969.htm This bill was on a "fast track"
in the Legislature. It was passed by the House with one amendment
94 to 59 with 3 voting "present" on January 28. It
was finally passed by the House 94 to 59 with 3 "present
on January 29. The Senate Ways and Means committee approved the
bill with no amendments. It was taken up by the full Senate on
March 15. Then the bill slowed down. It was placed on the Senate
Informal Calendar of House Bills on Third Reading on March 15
with Amendment 1, offered by Sen. Wayne Goode, pending. Goode's
amendment would actually close the "Geoffrey Loophole"
and was said to generate $13 million in revenue for the state. The bill was taken up by the full Senate on May 7,
and then referred to the Governmental Accountability and Fiscal
Oversightcommittee. That committee never held a hearing on the
bill, so that it where it died.
House Bill 969 -- CORPORATE INCOME TAX AVOIDANCE
SB 1198 died, and it was never offered as an amendment to HB 969. This unnecessary incentive to businesses remains on the books, as do many other corporate tax loopholes that lose revenue for the state.
The following report by Virginia Young in the St. Louis Post-Dispatch on Wednesday, Jan. 14 Business section, is an excellent appraisal of this legislation AS PASSED BY THE HOUSE:
JEFFERSON CITY - The Republicans' proposal to end a corporate tax break really does nothing, state officials and a national expert said Tuesday.
The GOP plan was developed by the Missouri Chamber of Commerce and Industry as an alternative to a broader approach suggested by Gov. Bob Holden. The chamber says its version would block tax abuses without penalizing legitimate companies.
The bill would require businesses to meet certain criteria when they set up holding companies in tax-haven states such as Delaware. For example, the holding company would have to be a profit-making business.
The criteria are designed to show whether a holding company has a legitimate function or was set up simply to avoid paying taxes, said the sponsor, Rep. Shannon Cooper, R-Clinton.
But the Missouri Department of Revenue predicted that the state would garner no additional taxes from the GOP plan because all businesses could easily meet the criteria.
"We don't think there are any companies that are taking advantage of this that will have to pay tax in the future" if the proposal passes, said Stan Farmer, director of the state's Division of Taxation.
Now, a firm can set up a holding company and ship its profits there, calling the money royalty payments for use of the company trademark. The royalty payments are deducted from taxable income, thus escaping taxes in the states where the company does business. No tax is owed in Delaware, where most of the holding companies are headquartered, because that state exempts income from patents and trademarks.
In a news release, Michael Mazerov, senior fellow at the Center on Budget and Policy Priorities in Washington, said no corporations with Delaware holding companies would have difficulty meeting the criteria in the Missouri bill. A labor-backed group called the Missouri Citizen Education Fund distributed Mazerov's remarks. ###
Corporations (which are legally defined as "citizens") should pay their fair share, and not be given a permanent means to legally avoid paying taxes to Missouri.
Last Update: 5/29/04
This proposal FAILED.
For the official bill summary & other information, see: http://www.house.state.mo.us/bills041/bills/HB1566.HTM
This bill was passed by the House 88-72 in a marathon session on March 17, 2004. It was reported to the Senate and "first read" on March 18. A hearing was held by the Senate Government Accountability and Fiscal Oversight committee on April 1. No one testified for the bill except the House sponsor, Jodie A. Stefanick, District 93 (St. Louis County). The hearing room was packed with persons testifying against this legislation.
The objective of HB 1566 was to eliminate many Medicaid health services. The "rationale" of proponents is that if the dollars aren't appropriated for these services, then the state shouldn't have to provide them. But accompanying that is the refusal of the Republican leadership and majority to support any tax increase (by ANY means) to provide revenue for needed services for Missouri's citizens.
A SENATE COMMITTEE SUBSTITUTE for HB 1566 was approved in the Senate committee executive session on April 8. A filibuster in the last hours of the session prevented this bill from being brought up for a final vote in the Senate.See the Summary of the SCS at the web address given above. Though the Senate committee verson eliminated many of the harmful provisions of the House-passed bill, it kept cost-sharing, annual verification, and work search inquiry provisions of the House bill.
According to an analysis of the SCS for HB 1566 by Joel Ferber, Legal Service of Missouri Legal Services and Sidney Watson, St. Louis University Center for Health Law Studies, the provisions of the SCS for HB 1566 would have cost the state money rather than cutting spending.
They state: "One of the most striking things about these provisions is that during a time of tight budgets and fiscal restraint, they add burdensome and expensive new bureaucratic requirements that cost the state more money. In particular, the co-payment provisions, which are prohibited by federal Medicaid law, will result in both the loss of federal matching funds and increases in state spending. At the same time, all of the provisions would have a negative impact on access to health care for low-income people who are eligible for the Medicaid program."
-------------------------------------------------------------------- Following is an ANALYSIS of HB 1566 (the version passed by the House) by Joel Ferber of Legal Services of Eastern Missouri:
March 19, 2004
Some Key Points about the House-Passed version of HB 1566:
1. The
bill would impose new asset tests on children and families.
Families in the "Medical Assistance for Families" program
would have an asset test of $1000. The Department of Social Services
has indicated that this would cause 1600 parents to lose
Medicaid coverage. Additional children could lose coverage as
well when their parents are cut off of Medicaid or if their parents
do not apply because they believe that the whole family is ineligible
because of the asset test. Missouri would lose $2.2 million in
federal funds as a result of this change.
The bill would impose a new $25,000 asset test in the SCHIP program. The Department has stated that 881 children would become uninsured if this test is implemented. Only two states in the country have asset tests in their SCHIP programs.
The reason that most states do not have asset tests in their SCHIP programs is that asset tests are a barrier to health coverage for families, and are administratively burdensome and expensive for states to implement. States have achieved substantial savings from eliminating asset tests for children and families. Asset tests and the resulting paperwork deny coverage to eligible families as well as those whose resources exceed the asset limit.
2. The
legislation would impose additional premiums and co-payments
on children in the SCHIP program with incomes between 151% and
225% of the poverty level.
The Department has indicated that the new premium requirement
would cause 20,000 Missouri children to lose health care coverage.
The Department has previously indicated that the new premiums
would cause Missouri to lose over $21.5 million in federal SCHIP
funds.
3. The legislation would deny health coverage to children in families with incomes between 151% and 225% of the poverty level who are deemed to have access to health insurance coverage at a cost of $299 per month, $3558 per year. Medicaid coverage will be denied whether or not these children are actually able to obtain health insurance.
The Department indicates that 3000 additional children
(above the 20,000 children who would lose coverage if only premiums
were imposed) would lose coverage as a result of this new
requirement.
Under this proposal, a family of three earning $1960 per month
is ineligible for Medicaid if they could purchase private insurance
for $299 per month -15% of their income. Policy experts and federal
SCHIP law recognize that poor families cannot afford to pay more
than 5% of family income for health insurance and still have money
available to cover food, rent, and other necessities. This provision
will result in poor children whose families are unable to afford
private insurance losing Medicaid and becoming uninsured.
This provision would also deny families access to SCHIP coverage even where the only available employer- sponsored coverage offers a far more limited benefit package (e.g., it does not include well-child visits or mental health care).
4. The legislation would add new burdensome, expensive administrative requirements.
The State agency would be required to ask all Medicaid recipients, including recipients who have been determined to be disabled and recipients in nursing homes, whether they are they looking for work, and why they are not using employment-based health coverage. The requirement that caseworkers ask these additional questions that are not related to Medicaid eligibility will cause confusion, create unnecessary work for caseworkers, and ultimately create barriers to coverage for eligible children, families, and elderly and disabled Missourians. (For example, families seeing these types of questions on the form about work may erroneously think that there is a work requirement in the Medicaid program).
The legislation would require the Division of Family Services to conduct annual reviews for all Missouri Medicaid recipients in addition to requiring the collection of additional information during these reviews. The Department indicates that significant numbers of additional Family Support Division staff (183 caseworkers, 18 supervisors and 50 clerical staff) would be needed to perform these new administrative responsibilities but the bill provides no funding for the additional bureaucracy that the bill would require.
The bill's co-payment requirements place additional administrative requirements on providers, Medicaid beneficiaries, and state agencies to track and collect the payment of these new co-payments. Studies show that Medicaid beneficiaries' access to health care is diminished when co-payments are imposed.
5. This legislation would remove guarantees in state law regarding who is covered by Medicaid and what services they can receive.
The legislation makes critical health care services (like prescription drugs) subject to the annual budget process. In any year, the legislature or the Governor would decide who would receive health care and who would not, what services they would receive and what they would not. This replaces the current certainty that seniors and people with disabilities have that they will receive their medications through Medicaid each year.
This legislation will enable the Department to implement the Medicaid dental and optical services cuts in the House's Proposed Budget. People will lose medically necessary dental and vision services, which will negatively effect their overall health. This will cause Missouri to lose about $11 million in federal funds.
6. The bill would cause some 25,000 Missourians to become uninsured and would allow the State to make thousands more uninsured because their coverage would no longer be guaranteed in state law.
This consequence would cause an increase in Missouri's rate of uinsurance and its uncompensated care burden, shifting costs to other parts of the health care system, and ultimately to insurance companies, employers, and individuals who have insurance.
The bill's Medicaid restrictions will have an adverse health impact on low-income children, families, people with disabilities, and seniors, who lose coverage and services. It is undisputed that health insurance, including coverage through Medicaid, improves access to health care, as well as health outcomes.
The substantial loss of federal funds resulting from this bill will also cause a significant loss of Missouri jobs, wages and economic activity.
###
Last Update: 5/29/04
SENATE BILL 1280
This proposal FAILED.
Sponsored by Senator Childers. Raises the sales tax by 1/2% and then phases it out over three years.This act increases the sales tax by 1/2% for one year, then lowers the increase to 1/4% for one year, then lowers the increase to 1/8% for one year, and finally returns the sales tax rate to the current levy (4.225%)
The act had a referendum clause for August 2004, and an effective date of October 1, 2004, if approved by the voters.
SB 1280 was heard by Senate Ways and Means Committee on March 9. There was no further action.
See: http://www.senate.mo.gov/04INFO/BILLS/SB1280.htm
Missourians for Tax Justice opposes any sales tax increase --state or local-- but commends Senator Childers for his efforts to raise needed state revenue.
SENATE BILL 1281
This proposal FAILED.
Sponsored by Senator Childers. Would increase the income tax by 1/2% for one year, then lowers the increase to 1/4% for one year, then lowers the increase to 1/8% for one year, and finally returns the sales tax rate to the current levy.The act had a referendum clause for November 2004, and an effective date of January 1, 2005, if approved by the voters.
SB 1281 was heard by Senate Ways and Means Committee on March 9. There was no further action.
See: http://www.senate.mo.gov/04INFO/BILLS/SB1281.htm
Missourians for Tax Justice would support this legislation, but it would not raise sufficient revenue to meet needs. MTJ supports a new graduated income tax structure to bring the state into the 21st Century.
Missouri's income tax structure is badly outdated. The brackets are graduated only up to $9,000. Above that amount, all taxable income is taxed at the same 6% rate. This $9,000 figure was set in 1931. The brackets and rates were set in 1971. It is no longer truly progressive. Those at upper income levels are not required to pay a fair share.
See "TAX JUSTICE for a HEALTHY MISSOURI" Campaign
Last Update: 5/29/04
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This proposal FAILED.
SB 1374 was sponsored by Sen. Mike Gibbons. It was filed on the last day for filing new bills in the Senate (March 1) and was referred to the Senate Ways and Means Committee on March 4.No hearing was held or scheduled on the bill by this committee.
(The Joint Tax Policy committee did hold a meeting/hearing on SB 1374 on March 31, but that committee had no authority over the bill. [See below.] Recommendations to the Senate as to whether the bill should "pass" or "fail" must be made by the standing Senate Ways and Means Committee.)
The "flat tax" provisions of this bill would establish a single tax rate of 4 1/2% on the individual income of individuals. The act also replaces most additions, subtractions, and deductions from Missouri adjusted gross income with a personal deduction of $10,000 per taxpayer ($20,000 for a combined return, $15,000 for a head of household return, $20,000 for a surviving spouse return, and $1500 for a dependent filer).
A fiscal note for SB 1374 was posted on the Internet on March 31 --after a meeting on the bill was held by the Joint Committee on Tax Policy at 8 a.m. Prior to this meeting we were told that it would be "a brain-storming session." But Sen. Gibbons called on three persons to testify on the flat tax provisions of the bill.
The lobbyist for Missourians for Tax Justice then presented an analysis of the flat tax provisions prepared for MTJ by the Institute on Taxation and Economic Policy. This was not welcomed by Sen. Gibbons (Senate District 15) and Rep. Shannon Cooper (House District 120).
This preliminary analysis shows that the state would lose $176 million dollars of revenue. The bill would give a large tax cut to the wealthiest taxpayers, and a few dollars reduction to some at the bottom of the economic scale. (The analysis is preliminary since no fiscal note on the bill was available when it was prepared.)
Under this bill, the average TAX CUT to the top 1% of Missouri taxpayers (those with $283,000 or more income -- with an average income of $749,400) would be more than $6,000. This is 88% of the "benefits" from this proposal.
The next wealthiest group ($124,000 to $283,000 income; average of $170,300) would realize a 15% share of the tax cut, an average of $259. This amounts to 15% of the benefits from this proposal.
But the other 95% of Missouri taxpayers would be virtually unaffected by this proposal. Their tax change would range from $0, to -$2, +$25, -$23, and +$14.
The March 31 fiscal note presents figures that are highly questionable. Further analysis of this document is being made.
No flat tax proposal can be fair and equitable. We can simplify our tax structure (if that is the goal) without creating an even more unjust tax structure than we have a present. Missourians for Tax Justice opposes the flat tax provisions of SB 1374.
The bill contains five other tax changes. For more information, see: http://www.senate.state.mo.us/04INFO/bills/SB1374.htm
Last Update: 5/29/04
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Because more revenue than anticipated was received by the state this year, the budget passed by the General Assembly this session was "balanced." However, there were still serious cuts in social services, health, mental health and other programs.
There was no restoration of cuts made during the past three years -- cuts in K-12 and higher education funding, Medicaid, health services, disease prevention and other important programs. From FY 2002 to FY 2005, we have had over $500 million in cuts from social services programs and over $85 million from mental health. The school equity program will be underfunded in FY 2005 by roughly $600 million, and expert testimony before the legislature indicates that even at full funding, the state is roughly $900 million below funding adequate to meet state and federal requirements.
Missouri's state tax system does not produce sufficient revenue to meet citizens' needs. Our tax system is inadequate, inequitable and outdated. We need to change it. Legislators in power for the past two years have resisted any effort to increase revenue to meet our needs.
It seems evident that to get state government that acts in the people's interests, and state legislators who care about people, citizens need to take action at the polls in upcoming elections.
Last Update: 5/29/04
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