SPONSOR: Fitzwater
COMMITTEE ACTION: Voted "Do Pass with HCS" by the Standing Committee on Emerging Issues by a vote of 11 to 0. Voted "Do Pass" by the Standing Committee on Rules- Administrative Oversight by a vote of 12 to 0.
The following is a summary of the House Committee Substitute for HB 1590.
This bill modifies numerous provisions of law relating to incentives for new businesses.
RIGHT-TO-START ACT (Section 34.195, RSMo)
This bill establishes the "Right-to-Start Act".
No later than June 30, 2024, and annually thereafter, the Commissioner of the Office of Administration shall file a report with the General Assembly that includes:
(1) The number of contracts awarded to businesses that have been in operation for less than three years and the percentage of such amount compared to the total number of contracts awarded; and
(2) The total dollar amount of contracts awarded to businesses that have been in operation for less than three years and the percentage of such amount compared to the total dollar amount of contracts awarded.
The Commissioner shall also, in conjunction with the Office of Entrepreneurship established under Section 620.3800, file a report with the General Assembly making recommendations on improving access and resources for new Missouri businesses that have been in operation for less than three years by January 1, 2024.
TAXATION (Sections 143.022 and 143.071)
Currently, there is an individual income tax deduction for business income. This deduction phases into 20% by 5% increments if certain triggers are met. No increase to the deduction will go into effect unless the net general revenue collected in the previous fiscal year exceeded the amount of net general revenue in any one of the three fiscal years prior to such year by at least $150 million. Shareholders of "S" corporations and partners in partnerships will be allowed a proportional deduction based on their share of ownership. As specified in this bill, the first $100,000 of any remaining business income amount from a taxpayer that begins business operations in this state on or after January 1, 2023, after the subtraction provided for in law, shall be reduced for the first through third tax years in which the taxpayer's business is in operation by 20%.
Additionally, for all tax years beginning on or after January 1, 2023, in lieu of the tax currently imposed under law, a tax is imposed upon the Missouri taxable income of a corporation validly licensed under the applicable laws that begin operations in this state on or after January 1, 2023 for the first through third tax years of such corporation, of 3% for the first $100,000 of the corporation's income.
OFFICE OF ENTREPRENEURSHIP (Section 620.3800)
This bill creates the "Office of Entrepreneurship" within the Department of Economic Development. The Office will employ an individual to promote policies and initiatives to support the growth of entrepreneurship in the state. The Office will work with stakeholders and communities to provide information and technical support to entrepreneurs. The Office will support and advice the Office of Administration with preparing the report making recommendations on improving access and resources for new Missouri businesses.
This bill is similar to HB 1202 (2021).
The following is a summary of the public testimony from the committee hearing. The testimony was based on the introduced version of the bill.
PROPONENTS: Supporters say that this bill will support the development of new business, retain young business owners within the state, and promote economic growth. The bill will remove barriers to entry for new business owners. This bill will likely not be subject to abuse or fraud by business owners because the income tax deductions and exemptions provided for in the bill are not so high as to encourage this behavior.
Testifying for the bill were Representative Fitzwater; Mo Retailers Association; Mo Grocers Association; Mo Tire Industry Association; Associated Industries of Missouri; Jason Grill; Victor W. Hwang, Right to Start; Mitchell Davis, Kansas City Chamber of Commerce and United WE; Missouri Chamber of Commerce and Industry; Kansas City Tech Council; and Next Missouri. OPPONENTS: Those who oppose the bill say that this bill opens the potential for fraud and abuse. Opponents note a similar tax incentive program that was introduced in Kansas that has seen people abuse the program.
Testifying against the bill were Arnie C. Ac Dienoff; and the Missouri Budget Project.
Written testimony has been submitted for this bill. The full written testimony can be found under Testimony on the bill page on the House website.
Statutes affected: