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Impact of HB 1989: Comprehensive Income Tax Reform Bill

Impact of HB 1989: Comprehensive Income Tax Reform Bill. Analysis from Institute on Taxation and Economic Policy And Missouri Association for Social Welfare. Missouri Association for Social Welfare. MASW is a citizen advocacy organization founded in 1901

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Impact of HB 1989: Comprehensive Income Tax Reform Bill

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  1. Impact of HB 1989: Comprehensive Income Tax Reform Bill Analysis from Institute on Taxation and Economic Policy And Missouri Association for Social Welfare

  2. Missouri Association for Social Welfare • MASW is a citizen advocacy organization founded in 1901 • It is the mission of MASW to provide the leadership, research, education and advocacy to improve public policies and programs impacting the health and welfare of all people in Missouri • MASW consists of statewide membership, Board of Directors, Task Forces, Chapters and Staff.

  3. Microsimulation Tax Model What is ITEP? • Built in 1994-1996; still evolving • Predicts: • Effect of tax changes on taxpayers at different income levels • Revenue loss/gain from tax changes • Estimates impact of current state and local taxes in all 50 states • Washington DC based • “Think Tank” • Non-Profit • Founded in 1980

  4. Adequacy • Providing sustainable adequate revenue over the long and short term • Fairness • Balances regressive sales and property taxes • Modern, changes over time Tax Policy Principles

  5. Fairness: A Regressive Tax System

  6. Rates and Brackets • Outdated • Graduated in Name Only 58%

  7. How HB 1989 Works: #1: Broadens and indexes tax brackets, adds new top rates #2: Introduces $200 refundable credit that is phased out for higher income levels and indexed for future years #3: Eliminates the deduction for federal income taxes paid

  8. Component #1: Broadens tax brackets, adds new top rates 14%

  9. Component #2: $200 Refundable Credit • $200 Refundable Credit Per Person • Credit is phased out for higher income levels • $30-50,000 for single people • $60-80,000 for married couples = $800 Credit

  10. Component #3:Removes Deduction for Federal Income Taxes • Missouri is 1 of 6 states that allows a deduction for federal income taxes paid • Deduction largely benefits the wealthiest taxpayers

  11. The Impact HB 1989 has on Missourians $50,000 Tax Cut = $425 $19,000 Tax Cut = $415 $35,000 Tax Cut = $469

  12. House Bill 1989 • Adequacy • Increases revenue by $1.5 billion • Fairness • Balances regressive sales and property taxes • Modernizes income tax brackets

  13. Filing of the Tax Justice for a Healthy Missouri bill • Rep. Judy Morgan (District 24-Kansas City) filed the Tax Justice for a Healthy Missouri bill on Feb. 25. Find a copy at www.house.mo.gov. • The bill has been sponsored annually since 2006, and 26 co-sponsors was the previous high obtained (by former Rep. Oxford in 2012). • Rep. Morgan has a record number of co-sponsors in 2014: 31!

  14. How to Join MASW • Visit our website at www.masw.org • Details about the different task forces, chapters, upcoming events and more • Use PayPal to securely pay membership dues • Contact Susan Cook at the MASW office for a membership application • (573) 634-2901 ext 303 • email her at scook@masw.org

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