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KANSAS CITY, Mo.
Missouri Gov. Jay Nixon signed legislation Tuesday that will gradually repeal a tax on some Missouri businesses.
The bill, which was approved by Missouri lawmakers earlier this month, reduces Missouri's so-called franchise tax rate over the next several years before repealing it altogether for the 2016 tax year. The state has levied the tax on corporations' assets such as inventory and buildings since 1917.
Missouri has, however, gradually reduced the tax rate and exempted smaller businesses. In 2009, lawmakers exempted firms with less than $10 million in assets from the tax. The new measure applies to those companies with assets of more than $10 million in Missouri.
The measure that Nixon signed Tuesday at Boulevard Brewing Co. in Kansas City also freezes what businesses are required to pay under the tax so that firms would not pay more than what they paid last year.
"As governor, my top priority is working with Missouri businesses to create jobs to move Missouri forward," Nixon said at the signing. "We want to be a place where people are incented to invest, where people are incented to make capital investments, where they are investing in our state."
Business groups around the state had been working to get the tax repealed for years. Dan Mehan, president and CEO of the Missouri Chamber of Commerce and Industry, which advocated for repealing the tax, said Missouri is one of the few Midwestern states with both a franchise tax and a corporate income tax. He said repealing the measure, which despite its name is not based on whether a company is a franchise or not, would save employers about $80 million.
"These days we are fighting for very job," Mehan said in a release. "Any policy we can implement to help businesses grow and expand our workforce is absolutely needed."
Critics of repealing the tax have questioned how the state would make up for the lost revenue.
Amy Blouin, executive director of the Missouri Budget Project, which analyzes state policies for the effect on the poor, said repealing the tax at a time when the state budget faces a shortfall "defies common sense."
"It's extremely disappointing that the state would eliminate a source of revenue while facing a general revenue shortfall approaching $700 million," Blouin said in a release.
Nixon did not provide specifics on how the state would recoup the revenue, but said there was evidence, including added jobs, that pointed to a recovery.
"We have had six good months here, six months of income moving up," he said. "The goal here is to grow the economy."