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AIM for Good Business Issue Articles

Pro-Business Taxation & Workers' Compensation Policies Advance in Mo Capitol

Nathan Dampf, AIM Director of Communications, 1/27/2011


At a hearing yesterday to discuss the elimination of Missouri’s franchise tax, AIM President Ray McCarty stated, “We’re very much supportive of capping, freezing, eliminating, torturing, killing the franchise tax.”


Missouri’s franchise tax was enacted in 1917 to tax corporations on all assets. Recently, the legislature compromised on an AIM-supported position to eliminate the tax. Rather, they chose to exempt Missouri businesses that have less than $10 million in assets – most affected by this law are small businesses. Yesterday was the first step to commit to the original plan to help Missouri businesses that pay over that $10 million threshold. The House Tax Reform committee, chaired by Rep. Doug Funderburk (R-St. Charles), heard House Bill 76 to cap the franchise tax at 2010 levels to ensure no Missouri business pays additional franchise taxes this year compared to last year’s tax liability.

The bill sponsor Rep. Jerry Nolte (R-Gladstone) commented, “Double taxation is not what you want to do if you want to encourage capital investment in our state.”


Similar legislation was heard in the Senate Jobs, Economic Development and Local Government Committee. Senate Bill 18, filed by Senator Eric Schmitt, was heard in the committee he chairs yesterday. Sen. Schmitt’s SB19 was also heard. That language would phase-out Missouri’s franchise tax entirely within a five year period. No votes were taken on any of the bills, however the committees are expected to debate the language and hold votes within the next week.


Another one of the Restore Prosperity and Fix the Six initiatives was heard in House and Senate committees this week. The Workers’ Compensation reforms to change co-employee liability due to the Robinson v. Hooker case and the occupational disease coverage under workers’ compensation were both heard this week in the House Workforce Development and Workplace Safety committee and the Senate Judiciary and Civil and Criminal Jurisprudence committee. AIM testified in support of both pieces of legislation in the two committees.


Lastly, the House International Trade and Job Creation committee met yesterday to hear House Bill 61, also sponsored by Rep. Nolte, to maintain a Missouri minimum wage that does not surpass that of the federal minimum wage. In 2006, Missouri voters approved an increase in the minimum wage, but another portion of the Proposition B language included an indexing modifier that increases Missouri’s minimum wage quarterly as the Consumer Price Index increases. This provision has hindered Missouri small business owners from being able to create jobs.


At one point, the indexing modifier has forced Missouri’s minimum wage above the federal level. While most Missouri companies pay well over the minimum wage, there are several companies in Missouri that pride themselves for paying a specific percentage above the minimum wage. With the constant changes, those companies are either left to increase the pay to maintain that percentage or not increase the wage. Subsequently, that company would not be able to tout their ability to pay two-times, three-times, or more than, the minimum wage. If they do decide to maintain that percentage, costs of business go up.


In addition to the direct impact, there are always secondary impacts. Although companies pay over the minimum wage, most likely there are suppliers who pay certain personnel at minimum wage. If that is the case, that company would also be forced to increase their minimum wage. To pay for that additional pay, the company would increase rates which are paid by their customers.


Specifically, Missouri retailers and grocers hire young teenagers. Their ability to do so has been tough with the provisions that were approved. If they know the Missouri minimum wage will coincide with that of the federal level, they have the certainty of a finite wage and will be able to hire more teenagers who will in turn, spend that money in our Missouri economy.


Associated Industries of Missouri hosted a group of employers at the International Trade and Job Creation committee this week and delivered the testimony of other businesses to the committee. We appreciate the comments of the business leaders who chose to participate in this important hearing.


While AIM actively lobbied for all of these issues this week and solicited the comments and support of our membership, we encourage you to let us know of any legislation important to your business. AIM has over 90 years experience working for businesses in the legislature. If given the opportunity to expand on that experience and success record, you can be guaranteed we will work for you to continue that support of business.