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SECOND REGULAR SESSION
HOUSE BILL NO. 3026
103RD GENERAL ASSEMBLY
INTRODUCED BY REPRESENTATIVE RUSH.
6748H.01I JOSEPH ENGLER, Chief Clerk
AN ACT
To amend chapter 50, RSMo, by adding thereto three new sections relating to local earnings
taxes.
Be it enacted by the General Assembly of the state of Missouri, as follows:
Section A. Chapter 50, RSMo, is amended by adding thereto three new sections, to be
2 known as sections 50.1351, 50.1356, and 50.1361, to read as follows:
50.1351. 1. As used in sections 50.1351 to 50.1361, the term "earnings tax"
2 means a tax on the following:
3 (1) Salaries, wages, commissions, and other compensation earned by a county's
4 residents;
5 (2) Salaries, wages, commissions, and other compensation earned by
6 nonresidents of a county for work done or services performed or rendered in the
7 county;
8 (3) Net profits of associations, businesses, or other activities conducted by a
9 county's residents; and
10 (4) Net profits of associations, businesses, or other activities conducted in a
11 county by nonresidents of the county.
12 2. (1) As used in sections 50.1351 to 50.1361, the term "salaries, wages,
13 commissions, and other compensation" shall not be construed to include any
14 contributions to a deferred compensation plan including, but not limited to, a salary
15 reduction plan, a cafeteria plan, or any other similar plan deferring the receipt of
16 compensation by a resident or nonresident of a county if such contribution is not subject
17 to Missouri state income tax at the time such contribution is made.
EXPLANATION — Matter enclosed in bold-faced brackets [thus] in the above bill is not enacted and is
intended to be omitted from the law. Matter in bold-face type in the above bill is proposed language.
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18 (2) The net profits or earnings of associations, businesses, other activities, and
19 corporations shall be ascertained and determined by deducting the necessary expenses
20 of operation from the gross profits or earnings.
21 (3) The earnings or net profits subject to tax of any nonresident individual, of
22 any association or business conducted by nonresidents, or of any corporation, in any
23 case in which the work done, services performed or rendered, and business or other
24 activities conducted are done, performed, rendered, or conducted both within and
25 without the county may be ascertained by formula as set forth in any ordinance enacted
26 under sections 50.1351 to 50.1361 or prescribed by rules or regulations adopted under
27 such ordinance.
28 3. The governing body of a county may, by order or ordinance, replace all taxes
29 levied and imposed on all real property and personal property by such county with an
30 earnings tax as provided in sections 50.1351 to 50.1361. No order or ordinance
31 replacing such property taxes with an earnings tax shall become effective unless the
32 governing body of the county submits to the qualified voters of the county at a state
33 general, primary, or general municipal election a proposal to authorize the governing
34 body of the county to replace such property taxes with such earnings tax.
35 4. The question submitted shall be in substantially the following form: "Shall __
36 ____ (insert county name) County replace all real property and personal property taxes
37 levied and imposed by the county with an earnings tax at a rate that will produce
38 substantially the same revenues as produced by the real and personal property taxes?".
39 5. If a majority of the votes cast on the proposal by the qualified voters voting
40 thereon are in favor of the proposal, the order or ordinance shall be in effect. If a
41 majority of the votes cast by the qualified voters voting thereon are opposed to the
42 proposal, the governing body of the county shall have no power to replace the property
43 taxes and impose the earnings tax unless and until the governing body of the county
44 submits another proposal to authorize the governing body of the county to replace the
45 property taxes and impose the earnings tax under sections 50.1351 to 50.1361 and such
46 proposal is approved by a majority of the qualified voters voting thereon.
50.1356. 1. The income received by any of the following shall not be taxable
2 under an earnings tax imposed under sections 50.1351 to 50.1361:
3 (1) A labor, agricultural, or horticultural organization;
4 (2) A mutual savings bank not having a capital stock represented by shares;
5 (3) A fraternal-beneficiary society, order, or association, operating under the
6 lodge system or for the exclusive benefit of the members of a fraternity itself operating
7 under the lodge system and providing for the payment of life, sick, accident, or other
8 benefits to the members of such society, order, or association or their dependents;
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9 (4) A domestic building and loan association or credit union without capital
10 stock organized and operated for mutual purposes and without profit;
11 (5) A cemetery company owned and operated exclusively for the benefit of its
12 members, unless such cemetery company is operated for profit;
13 (6) A corporation or association organized and operated exclusively for
14 religious, charitable, scientific, or educational purposes, no part of the net income of
15 which inures to the benefit of any private stockholder or individual;
16 (7) A business league, chamber of commerce, or board of trade not organized for
17 profit and no part of the net income of which inures to the benefit of any private
18 stockholder or individual;
19 (8) A civic league or organization not organized for profit but operated
20 exclusively for the promotion of social welfare;
21 (9) A club organized and operated exclusively for pleasure, recreation, and other
22 nonprofitable purposes, no part of the net income of which inures to the benefit of any
23 private stockholder or member;
24 (10) A farmer or other mutual hail, cyclone, or fire insurance company, mutual
25 ditch or irrigation company, mutual or cooperative telephone company, or like
26 organization, the income of which consists solely of assessments, dues, and fees collected
27 from members for the sole purpose of meeting its expenses;
28 (11) A farmer, fruit grower, or like association, organized and operated as a sales
29 agent for the purpose of marketing the products of its members and turning back to
30 them the proceeds of sales, less the necessary selling expenses, on the basis of the
31 quantity of produce furnished by them;
32 (12) A corporation or association organized for the exclusive purpose of holding
33 title to property, collecting income therefrom, and turning over the entire amount
34 thereof, less expenses, to an organization that itself is exempt from the tax imposed by
35 chapter 143;
36 (13) A federal land bank or national farm loan association, as provided in
37 section 26 of an Act of Congress approved July 17, 1916, entitled "An act to provide
38 capital for agricultural development, to create standard forms of investment based upon
39 farm mortgage, to equalize rates of interest upon farm loans, to furnish a market for
40 United States bonds, to create government depositaries and financial agents for the
41 United States, and for other purposes";
42 (14) A joint stock land bank as to income derived from bonds or debentures or
43 other joint stock land banks or any federal land bank belonging to such joint stock land
44 bank;
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45 (15) An express company that now pays an annual tax on its gross receipts in this
46 state or an insurance company that pays an annual tax on its gross premium receipts in
47 this state; or
48 (16) A trust created by an employer and employees as part of a stock bonus,
49 pension, or profit-sharing plan, for the exclusive benefit of employees, to which
50 contributions are made by such employer or employees, or both, for the purpose of
51 distributing to such employees the earnings and principal of the fund accumulated by
52 the trust in accordance with such plan, or a trust consisting solely of one or more
53 restricted retirement funds created for one or more self-employed persons as part of a
54 retirement plan for the exclusive benefit of such self-employed person or persons, to
55 which contributions are made by such self-employed person or persons, for the purpose
56 of distributing to such self-employed person or persons the earnings and principal of the
57 fund accumulated by the trust in accordance with such plan and the amount actually
58 distributed, or made available to any distributee.
59 2. The following income shall be exempt from an earnings tax imposed under
60 sections 50.1351 to 50.1361:
61 (1) The proceeds of life insurance policies paid to the individual beneficiaries
62 upon the death of the insured;
63 (2) The amount received by the insured as a return of premium or premiums
64 paid by the insured under life insurance or endowment contracts, either during the term
65 or at the maturity of the term mentioned in the contract or upon the surrender of the
66 contract;
67 (3) Any amount received under workers' compensation acts, as compensation
68 for personal injuries or sickness, plus the amount of any damages received whether by
69 suit or agreement on account of such injuries or sickness, or through the federal War
70 Risk Insurance Act or any law for the benefit or relief of injured or disabled members of
71 the Armed Forces of the United States;
72 (4) The value of property acquired by gift, bequest, devise, or descent, but the
73 income from such property shall be included as income;
74 (5) Interest upon the obligations of this state or of any political subdivision
75 thereof or upon the obligations of the United States or its possessions; or
76 (6) Any income derived from any public utility performing functions of national
77 government or those incident to the state or any political subdivision thereof, or from
78 the exercise of any essential government function accruing to any state, territory, or the
79 District of Columbia.
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80 3. The governing body of a county may provide for deductions and exemptions
81 from salaries, wages, and commissions of employees and may provide for exemptions on
82 account of the spouses and dependents of such employees.
50.1361. 1. A county may impose upon employers the duty of collecting and
2 remitting to the county any earnings tax that may be levied upon the earnings of
3 employees under sections 50.1351 to 50.1361 and may prescribe penalties for failure to
4 perform such duty. In the event that such county imposes such duty on employers, each
5 such employer shall be entitled to deduct and retain one and one-half percent of the total
6 amount collected to compensate such employer for collecting such tax. The governing
7 body of any such county may, by order or ordinance, reduce, eliminate, or reimpose, if
8 eliminated, the fee allowed to employers by this subsection.
9 2. In order to facilitate the collection of the earnings tax authorized under
10 sections 50.1351 to 50.1361, such county may, by order or ordinance, create wage
11 brackets within which the earnings tax shall be uniform for taxpayers entitled to the
12 same number of exemptions.
13 3. No earnings tax order or ordinance enacted under sections 50.1351 to 50.1361
14 shall require any taxpayer to file copies of such taxpayer's state or federal income tax
15 returns with any county officer, employee, or other person designated by such order or
16 ordinance to collect or otherwise administer such earnings tax.
✔
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