Feb 05, 2018
From KPMG TaxWatch
Recently, Governor Eric Grietens of Missouri outlined his plan to turbocharge Missouri’s economy. In addition to reducing the top personal income tax rate and offering a special non-refundable credit to certain low income workers based on the federal earned income tax credit, the plan would cut the corporate income tax rate from 6.25 percent to 4.25 percent. Per the Governor’s outline, this change would give Missouri the second-lowest corporate income tax rate in the country among states that impose a corporate income tax. To ensure the tax plan is revenue neutral, the Governor proposes to eliminate certain tax breaks and close certain loopholes. These include eliminating the current two percent discount that is allowed when vendors timely file their sales and use tax returns or employers timely file and pay their withholding taxes. Another change would be to require all corporate taxpayers to use single-sales factor apportionment. Currently, Missouri allows taxpayers to elect, on an annual basis, to use either three-factor apportionment, single-sales factor apportionment, or a modified single-factor apportionment. Missouri is the only state in the country that allows corporate taxpayers to elect among three different apportionment options.
Another change would be to modify the deduction for federal income taxes paid. Currently, Missouri allows corporations to deduct 50 percent of their federal corporate income tax from their state corporate income tax. Only a handful of other states offer a similar corporate deduction. Missouri is also one of only five states to allow individual taxpayers to deduct federal income tax paid from state taxable income. Under the Governor’s proposal, the 50 percent corporate tax deduction for federal taxes paid would be repealed, and the individual deduction would be phased out based on the taxpayer’s income level. Finally, on the sales and use tax side, Missouri would join the Streamlined Sales and Use Tax Agreement to “realize revenue from remote sellers and level the playing field for local Missouri retailers.” Please stay tuned to TWIST for future updates on Governor Greitens’ tax proposal.
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The following information is not intended to be "written advice concerning one or more federal tax matters" subject to the requirements of section 10.37(a)(2) of Treasury Department Circular 230.
The information contained herein is of a general nature and based on authorities that are subject to change. Applicability of the information to specific situations should be determined through consultation with your tax adviser.