Missouri voters may soon decide one of the biggest tax policy questions the state has faced in decades: whether to gradually eliminate the state income tax and potentially replace much of the lost revenue with expanded sales taxes.
The proposal, approved by the Missouri Legislature this year, would phase out Missouri’s top individual income tax rate over time if certain state revenue targets are met.
Supporters say the plan could make Missouri more competitive economically, while critics warn it could increase costs for ordinary families and reduce funding for public services.
Gov. Mike Kehoe must decide whether the constitutional amendment appears on the August primary ballot or the November general election ballot.
According to reporting by Axios, Missouri collected about $9.2 billion in personal income taxes last year – roughly 65 percent of total state revenue.
To replace that money entirely through existing sales taxes would require major changes to Missouri’s tax structure.
What the proposal would do
The constitutional amendment would direct future legislatures to reduce income tax rates gradually based on revenue growth triggers. It would also give lawmakers authority to expand sales taxes to cover additional goods and services currently exempt under Missouri law.
At present, Missouri’s sales tax generally applies to physical goods but not most services. Groceries, prescription drugs and some utility costs are also partially or fully exempt.
Under the proposal, future lawmakers could potentially expand sales taxes to services such as:
- car repairs;
- legal services;
- haircuts;
- home repairs; and
- other transactions not currently taxed.
Supporters say the measure could help attract businesses and residents from states with higher income taxes.
“This is the first step in keeping our promise to make Missouri more competitive, attract jobs and investment, and let families keep more of what they earn from the start,” Kehoe said in a statement quoted by Missouri Independent.
Critics warn of higher costs for working families
Opponents argue the proposal could shift more of the tax burden onto middle- and lower-income households because sales taxes tend to affect consumers more broadly.
“Let’s be real. There is no opting out on buying everyday goods and services,” Democratic state Rep. Stephanie Hein said during legislative debate. “You have to feed your family, you have to have a place to live. You have to be able to buy your medicine. Those are non-negotiables.”
Amy Blouin, another critic of the proposal, called it a “misleading tax scheme” that would increase costs for many working families.
Critics also point to neighboring Kansas, where deep tax cuts introduced during former Gov. Sam Brownback’s administration in the 2010s led to major budget shortfalls and education funding problems before many of the cuts were later reversed.
The Guardian reported that some economists and tax analysts remain skeptical that eliminating income taxes automatically creates major economic growth.
Broader national trend
Missouri is not alone in considering major tax changes.
Republican-led states including Georgia, South Carolina and West Virginia have also discussed reducing or eventually eliminating state income taxes.
Supporters often point to states such as Florida and Texas, which do not levy state income taxes.
But economists note those states also benefit from factors Missouri cannot easily replicate, including tourism, population growth and different economic structures.
Meanwhile, a lawsuit filed in Missouri is seeking to block the proposed amendment from appearing on the ballot, arguing lawmakers improperly combined multiple policy issues into one measure.
For Missouri voters, the debate now centers on a broader question that extends beyond taxes alone: whether shifting away from income taxes would strengthen the state’s economy – or simply make everyday life more expensive for many residents.
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