By James R. Campbell
Nevada Daily Mail
Effective Aug. 28, a new Missouri law will offer substantial state income tax credits to small businesses for hiring more people.
Sponsored by State Sen. David Pearce and Rep. Denny Hoskins of Warrensburg, House Bill 1661 was signed into law by Gov. Nixon June 27, to give a $10,000 credit for each new job paying at least the average county wage and $20,000 for each one including healthcare insurance.
If a business is paying 6 percent income tax, for example, a $10,000 credit will take $600 off its bill, Pearce said. Vernon County's average annual wage this year is $31,676, according to the Missouri Department of Economic Development.
The two Republicans passed a similar measure last year, HB 45, which the Missouri Department of Revenue interpreted as being applicable only to Class C corporations, or publicly held companies. "That was not at all what we intended," Pearce said in a Friday telephone interview.
"HB 1661 defines small businesses as partnerships, sole proprietorships, limited liability companies and others known as flow-through entities with 50 or fewer employees," he said. "It also puts a five-year moratorium on new regulations.
"One thing we hear from business owners is that there are too many onerous regulations. That's what we're trying to get away from."
In a news release, Pearce had said his bill "will allow more of our state's small businesses to best utilize the incentives available to them.
"Making assistance available to a broader variety of businesses means a larger number of citizens will reap better benefits, in turn making Missouri stronger and setting us more firmly on the path to economic recovery," he said.
Pearce, who represents Vernon County in the 31st Senate District in Jefferson City, was redistricted into the 21st District and won the GOP nomination there Tuesday with 65 percent of the vote to Odessa Rep. Mike McGhee's 35 percent. Pearce will face Higginsville Democrat ElGene ver Dught in November.
In the realigned 31st, Ed Emery of Lamar won the Republican nomination to meet Drexel Democrat Charlie Burton in November.
Reviewing the jobs bill, Rep. Barney Fisher, R-Horton, said Friday that it "has the potential to help Vernon County businesses because those are nice credits.
"They're good for the employee and good for the employer," Fisher said. "Tax credits have come under disfavor because they've gotten a little out of control, but these are a spinoff of the Missouri Quality Jobs Act of 2005, which has been very successful. We'll have to see if it works, but I think the potential is here."
Based on average family income, only about $22,000 here seven years ago, the Quality Jobs Act gives credits to businesses for establishing at least 50 jobs and has a 50-percent healthcare benefit, Fisher noted.
The Missouri Chamber of Commerce backed the Pearce-Hoskins bill, said Jefferson City lobbyist Tracy King, because the benefits will multiply as time passes. "Unfortunately, we had a year when small businesses could have been getting deductions," she said.
"The effects are unknown, but part of the reason we touted it is that it will ultimately have a positive effect on the economy. It will mean some decrease in income tax revenues, but if a business hires somebody, that employee will pay sales taxes and income taxes. There's an indirect benefit."
King said the Kauffman Foundation in Kansas City expects business startups to be the foundation of the nation's recovery. "Enticing small businesses to hire is a step in that direction," she said.