The Missouri House failed to override Gov. Jay Nixon's veto of a measure that would have gradually reduced income tax rates over the next decade.
Despite holding a two-thirds majority in the chamber, the Republican-controlled House could not muster the votes to override the Democratic governor. Republicans needed all of their 109 members to enact the measure, but the attempt failed on a 94-67 vote.
In front of a standing-room only crowd in the House galleries, lawmakers debated whether the bill would help the state's economy or deprive the state of necessary revenue.
"We have a problem in Missouri. We are growing at a much slower rate than our peer," said bill sponsor Rep. T. J. Berry, R-Kearney.
Democrats countered that the measure would hurt state revenues and not help the middle class.
"It is a big tax giveaway for corporations and businesses but gives nothing to individuals," said Rep. Jon Carpenter, D-Kansas City.
For individual income taxes, the measure would have reduced the rate for taxpayers with over $8,000 in income by one-twentieth of a percentage point annually over a 10-year period. The annual reduction would have taken effect only if state revenues increased by at least $100 million over the highest revenue point of the previous three years.
The bill would also have reduced corporate income tax rates by three-tenths of a percentage point annually over 10 years. As long as state revenues increased annually by at least $100 million, the new corporate rate would have been set at 3.25 percent after a 10 year-period.
Nixon vetoed the bill in June over concerns that it would hurt education funding. He spent the past several months traveling the state to make his case and over 100 school boards passed resolutions supporting his veto. The governor also withheld about $400 million from this year's budget because of the tax-cut bill.
Nixon also pointed out that the bill would remove a sales tax exemption on prescription drugs and textbooks. Rep. Chris Kelly, D-Columbia, cited these and other mistakes in opposing the override.
"Nobody read the bill ... Not one of us did that, and that is a disgrace," he said.
Retired investor Rex Sinquefield poured over $2 million in the campaign to override the governor's veto. The Missouri Club for Growth announced at a press conference last month that it would target any Republican voting against the veto override at the next election.
During the legislative session the measure had garnered the support of 103 House members, 100 Republicans and 3 Democrats.
The tax-cut bill also would have required Missouri to join a compact with other states to help collect sales taxes from online transactions and would have allowed delinquent taxpayers to avoid penalties if they paid their full bill between Aug. 1 and Oct. 31.