Section 1 Banks Generally

• Library: Tax Law 2009

The taxation of banks in Missouri differs from the taxation of other corporations for many reasons, including the following:

• Most bank business was historically limited to one state by law

• Banks were a principal market for tax exempt municipal securities

• From the national government’s beginning, the taxation of federal banks by states was limited by the United States Supreme Court

Today these issues remain in muted form, but actual calculations of the primary differences are because of the annual tax specifically imposed on banks by the Bank Tax Law of 1946, §§ 148.010–148.110, now RSMo 2000 and Supp. 2007 (Missouri Bank Tax).

Until major tax legislation in 1986, the Missouri Bank Tax consisted solely of an annual tax measured by the bank’s net income for the preceding year. Also, before the 1986 amendments, Missouri banks were subject to the general Missouri corporate franchise tax imposed under Chapter 147, RSMo. The 1986 amendments, while exempting banks from Chapter 147, combined the corporate franchise tax computation with the previous Missouri Bank Tax. Now the Missouri Bank Tax is essentially equal to the sum of the old Missouri Bank Tax (which is income-based) and the Missouri general corporate franchise tax (which is asset-based).

The Missouri Bank Tax represents a parallel tax system that can increase, but not decrease, total taxes...