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Business groups are rushing to support the governor's tax plans

January 21, 1999
By: Jorge C. Alvarez
State Capital Bureau

JEFFERSON CITY - As Republicans were criticizing Missouri's governor for the size of his proposed tax package, he was getting a wave of support from a usual bastion of the Republican Party -- the business lobby.

Two proposals from the governor are getting rave reviews from business organzations.

One would exempt smaller businesses from the state's franchise tax -- a tax on total assetts. The other would provide a deduction for the health-insurance costs of self-employed taxpayers.

"We have been working for six years on this proposal, and this is the first time the governor introduced this sort of plan," said Brad Jones, director of the National Federation of Independent Business.

Jones' organization was one of several business groups that were quick to show support for Carnahan's plan -- some within a few hours of the governor's State of the State address.

Organizations issuing immediate endorsements of the governor's package included:

* Missouri Chamber of Commerce.

* NFIB.

* Associated Industries of Missouri.

Each group agreed on the proposal that would provide, if passed, full deductibily on health insurance premiums for the self-employed.

"This measure is very important for small business owners because it helps to elevate the high cost that they are paying for health insurance," Jones said.

The governor's other plan would raise the threshold for the corporate franchise tax, which is levied only on businesses. The proposal would increase the threshold 500 percent.

Currently, businesses worth $200,000 or more have to pay the tax. If Carnahan gets his way, only those worth $1 million or more would have to pay.

The governor's plans were welcomed by at least one small business owner. Jorge Luna, manager Latin World at 812 E. Broadway, said he thinks the proposals are a relief, but also are incentives to make the business bigger.

"This measure would be a relief for our pockets," Luna said. "Much of the money we save, including taxes, will help to reinvest in the shop."

Chris Long, president of the Associated Industries of Missouri, said Missouri's business sector pays over $4 billion, or 35 percent, of the total state and local tax burden.

"We support the governor's proposal, but at the same time we would like to continue working with the governor to identify deeper tax reductions for business," Long said.

Republicans have been sharing a similar sentiment.

"I do agree with the idea that taxpayers should have some relief," said Daryl Duwe, spokesman for the Republican Party. "I disagree with the amount."

He said Missourians need more tax relief than Democrats are so far willing to offer.

Because of extra revenue collected during the past few years, the state has had to mail refund checks to most Missourians -- a process that costs the state $1 million.

"Every year we have to refund money in addition to the tax cuts," Duwe said.

In his Wednesday address, Carnahan said his tax-cut package would save taxpayers $191 million, only possible because of the good performance of the economy.

Republicans maintain that will not be enough to remain below the Hancock tax lid.