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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

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
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.
microsimulation tax model
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
slide4

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

rates and brackets
Rates and Brackets
  • Outdated
  • Graduated in Name Only

58%

how hb 1989 works
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

slide9

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

slide10

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
slide11

The Impact HB 1989 has on Missourians

$50,000

Tax Cut = $425

$19,000

Tax Cut = $415

$35,000

Tax Cut = $469

house bill 1989
House Bill 1989
  • Adequacy
    • Increases revenue by $1.5 billion
  • Fairness
    • Balances regressive sales and property taxes
  • Modernizes income tax brackets
slide13

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!
how to join masw
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