(February 8, 2007) The Taxpayers Research Institute of Missouri testified in support of HB 458 sponsored by House Ways and Means Committee Chairman Rep. Mike Sutherland (R-99, Warrenton, shown at left) this week.The bill would raise the threshold of assets required for filing the franchise tax over several years with rate reductions in future years and would completely eliminate the tax in 2012. While supporting the bill, the Institute indicated its support for the complete elimination of the franchise tax and recommended the committee consider phasing out the rates of franchise tax beginning in the first year to provide tax relief to all franchise taxpayers. Raising the thresholds would eliminate the tax for many smaller corporations, but the bulk of the tax is paid by larger corporations that would see no tax relief until 2010 under the original plan contained in the bill.
The committee also heard HB 129, sponsored by Rep. Shannon Cooper (R-120, Clinton, pictured at right) that would fix a problem that was created when the state decoupled from federal bonus depreciation and federal net operating loss carryforward provisions several years ago. The fix was drafted by Associated Industries of Missouri Tax Committee members Ed Hoffstetter and Jim Tighe of PriceWaterhouse and Ed Downey of Bryan Cave. Ray McCarty, Executive Director of the Institute, and Ed Hoffstetter testified that this is a great example of the complexity and unintended consequences that can result when the state "decouples" from the federal tax code.
HB 248, sponsored by Rep. Neal St. Onge (R-88, Ellisville, pictured at left) that would allow contractors doing business with MoDOT to use project exemption certificates and eliminate sales tax on purchases made in fulfilling the contracts was also heard by the committee. The Institute's Ray McCarty testified that the current situation places Missouri suppliers at a competitive disadvantage with suppliers in other states and actually encourages even Missouri contractors to use out-of-state suppliers for highway projects with our own state highway department. Requiring the payment of sales tax on such purchases also results in a diversion of money from the Highway Fund to General Revenue as the highway projects are paid for with highway funds. Joe DeLong, DeLong's Inc., a steel fabricator of highway bridges, testified that the current law causes the already tight profit margin to completely disappear for a Missouri contractor while it encourages MoDOT to use steel fabricated outside Missouri. He testified the 1-2% difference between Missouri sales and use tax rates can make the difference between winning and losing such contracts.Besides the Taxpayers Research Institute of Missouri and Mr. Delong, representatives from the following were among those in support of the bill: Missouri Transportation Development Council, MoDOT, Associated General Contractors of Missouri, Associated General Contractors of St. Louis, and the Heavy Construction Contractors of Kansas City.
For more information on these or other tax bills, please contact Ray McCarty at rmccarty@aimo.com.
