May 1 (Reuters) - Missouri Governor Jay Nixon announced on Thursday he will veto a bill that would lower the state’s income tax rates, calling it “unaffordable, unfair and dangerous.”
The Republican-controlled legislature sent the bill, which gradually reduces the state’s maximum personal income tax rate, to Nixon on April 16.
The bill prohibits a rate reduction if the state’s net general revenues have not grown by at least $150 million. It also would create and phase in a 25 percent individual income tax deduction for business income.
But the Democratic governor said the measure would decrease Missouri revenue by more than $620 million a year when fully implemented and lead to funding cuts.
“This fiscally irresponsible legislation would permanently undermine support for education and the vital public services that strengthen our economy and support our quality of life, and it cannot become law,” Nixon said in a statement.
Earlier on Thursday, he raised the possibility that Missouri could lose its triple-A credit rating if the bill were to become law.
Late on Wednesday, Moody’s Investors Service downgraded Kansas by a notch to Aa2 from Aa1, citing in part budget pressures from the state’s phased-in income tax cuts and rising public pension costs.
“In their rush to follow Kansas down the fiscally irresponsible path of eliminating ‘pass-through’ income for businesses, the General Assembly seems determined to put Missouri’s spotless AAA credit rating at risk,” Nixon said. (Reporting by Karen Pierog, editing by G Crosse)