A bill sponsored by State Rep. Paul Curtman, R-Pacific, would adjust tax brackets for inflation to help people keep more money in their pockets, he said.
His bill passed out of the House last week and is now in the Senate.
Starting in 2015, the legislation would adjust Missouri’s tax brackets each year to correspond with the increase in the cost of living.
For instance, if the inflation rate was 3 percent, each tax bracket would go up by that much as well.
This will prevent people from accidentally being bumped up into a higher tax bracket due to inflation, he said.
Currently anyone who makes over $9,000 a year is in the highest tax bracket. Therefore, someone could be below the poverty level and still pay the highest tax rate of 6 percent, Curtman noted.
When the current tax brackets were established more than 80 years ago, $9,000 a year was a fairly good salary, Curtman said. But in today’s dollars, the equivalent amount is $138,000, he added.
He said his bill would especially help low-income residents. But he said it will also help those who make more money.
Curtman noted that he has received large bipartisan support for the measure.
Business organizations and the Missouri Budget Project have testified in favor of the bill, Curtman said.
The bill’s fiscal note estimates that the state will lose $26 million in revenue in 2017 by adjusting the tax brackets for inflation.
But Curtman said he does not think this would create a gap in state services. In fact, he said lower income people may have to depend on state services less since they will keep more money by removing them from the highest tax brackets.