Missouri will phase out its corporate franchise tax over the next five years according to a new measure signed into law yesterday. The Governor supported the measure as a means of attracting economic development and expanding existing business interests within the state. Currently, the tax is based on the amount of assets a business has in Missouri and takes one-thirtieth of one percent of the value of those assets as a tax. The Governor claims this rate creates an undue burden on business owners.
Under the terms of the measure, businesses with over $10 million in assets will pay less corporate franchise taxes each year for the next five years until they eventually pay nothing. The bill is in-line with another passed last year which eliminated the franchise tax completely for small businesses in the state. At the end of the five year period Missouri will require no corporate franchise tax payments for any business located there.
Last year, Missouri collected approximately $87.5 million through this tax. For the first year of the phase out, businesses will pay only what they paid in Tax Year 2010. For Fiscal Year 2012, the state will lose nearly $24 million in revenue from the phase out.
“We applaud Gov. Nixon for standing with Missouri’s employers and signing this legislation that will help companies expand and create jobs in our state,” said Dan Mehan, president and CEO of the Missouri Chamber of Commerce and Industry. “This is a tax cut that will make Missouri more competitive and help bring new jobs and investment to the Show-Me State.”