Bill would end tax breaks for non-Missourians

? Thousands of residents of Illinois, Kansas and elsewhere who work in Missouri are getting a break on their Missouri income taxes because they own property in their home state.

Missouri senators sought Thursday to put a stop to that, giving first-round approval to legislation that would close the tax break for non-Missourians and generate an estimated $11 million annually. The measure needs another vote to go to the House.

The tax break stems from federal law, which allows people to deduct property tax payments from their federal income taxes.

Because Missouri uses the federal deductions as a basis for its state income tax, nonresidents who earn money in Missouri get the benefit of the property tax deduction — even though their property is not in Missouri.

“There is no sound reason, or legitimate reason, why we should let that occur,” said Sen. Wayne Goode, D-St. Louis, who is sponsoring the legislation ending the income tax break for people who own no property in Missouri.

Technically, Goode’s legislation would require nonresidents who pay Missouri income tax to add back in the amount of their property tax deduction taken on their federal tax forms.

The state Office of Budget and Planning estimates that for 2001, more than 109,000 nonresidents claimed an average Missouri income tax deduction of $1,677 from property taxes paid in other states. Ending the tax for all of them would result in an additional $11 million annually in state income taxes, the office estimates.

Goode, a longtime member of the Senate Appropriations Committee, said lawmakers needed all the extra money they could get while trying to balance a budget with growing demands for additional education and health care spending.

In fact, the Senate skipped over two dozen bills Thursday to get to Goode’s legislation, trying to get a vote on the bill before the Senate Appropriations Committee begins work next week on the House-passed version of the state budget.

State Sen. Ken Jacob, D-Columbia, sought to earmark the expected $11 million in additional tax revenue to the Missouri College Guarantee Program, an existing scholarship plan for financially needy students. The state budget currently allocates nearly $8.4 billion for the program.

But the Senate defeated the earmarking amendment on a 22-9 vote.