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Missouri income tax elimination plan sparks questions in ag

The chairman of Missouri’s Senate Ag Committee says Governor Kehoe’s plan to eliminate the state’s individual income tax is getting a lot of questions in the ag sector.

Jason Bean tells Brownfield some ag businesses will be impacted.

“If you’re in an LLC or you have a general partnership, are you eligible to be in that zero income tax category? I’ve talked to accountants that say, yes, you are. The only exception that would be right now is if you’re in a C-corp.”

Missouri’s income tax currently funds about two-thirds of the state budget, and the lost revenue would be replaced by an increase in sales taxes.

In Missouri, a lot of ag purchases are already exempt from sales taxes, and Bean says that should continue, even if the state’s income tax is eliminated.

“We’re exempt on fertilizer, for example. We’ll stay exempt on fertilizer. All of those exemptions will stay in place.”

However, farmers could still see an increase in sales tax for general or personal use items.

“I think Netflix would be a service that is not taxed currently and that would be taxed. You know, we look at different things like maybe plumbing, electrical, stuff like that, I think that we will have to take a hard look at to see, you know, what is taxed and what is not taxed.”

Bean says the tax change could bring more economic opportunities to Missouri, but there are some concerns about the change causing higher taxes for some, along with an increase in the cost of living.

The Missouri Senate is currently considering a joint resolution, and Bean says it will take time for lawmakers to consider. Missouri voters are expected to get the final say on the ballot later this year.