Missouri Senate moves closer to replacing income tax with higher sales taxes
AI-generated summary reviewed by our newsroom.
- Senate passed a bill to seek voter approval to let lawmakers raise sales taxes.
- Eliminating the income tax is a top priority for Gov. Mike Kehoe.
- Analysis estimates shift would raise tax burden for 60 to 80% of residents.
Just after midnight on Thursday, the Missouri Senate passed a bill that supporters say could lead to the elimination of the state’s income tax, and grants lawmakers broad authority to raise sales taxes to replace it.
If passed, Missouri voters would be asked to approve a constitutional amendment granting lawmakers the ability to raise sales and use taxes. Missouri generates most of its general revenue funding from income taxes, and the proposal would dramatically shift how the state collects taxes.
Eliminating the income tax is a top priority for Gov. Mike Kehoe, a Republican, and among the most consequential pieces of legislation proposed this legislative session. Kehoe celebrated its passage in a social media post on Thursday.
“Following its passage in the Missouri Senate last night, HJR 173/174 now returns to the House—moving us one step closer to putting the future of modernizing our tax code where it belongs: in the hands of Missouri voters,” Kehoe said in a statement on social media.
Supporters say the bill will drive economic growth, and point to states like Florida, Texas and Tennessee as examples Missouri should follow.
“There’s data supporting it. Numbers don’t lie, and the benefit of this policy doesn’t lie either. I don’t see any scenario where it’s not a net positive to the taxpayer,” Sen. Ben Brown, a Washington Republican, said.
The Senate’s version differs from what the House passed last month, which automatically reduced the state income tax if the state is able to raise money from other sources. Instead, the Senate version removes the triggers and deadlines for implementing new tax structures.
A poll conducted in February by St. Louis University and YouGov found that Missourians broadly support the state relying more on sales taxes, but are against expanding them in any way. More recently, a poll by Torchlight Strategies reported that 37.3% of likely voters would support the proposal, 49.1% would oppose it and 13.6% are unsure.
“There’s going to have to be a lot of effort put out to make this a winnable resolution,” said Mike Moon, an Ash Grove Republican who was critical of the bill.
Sen. Joe Nicola, a Grain Valley Republican, said that the state’s focus this session should be on lowering property taxes rather than income tax.
“I don’t have one constituent that is talking to me about income tax, except to please vote no on this,” Nicola said. “The beginning of the session, our priority was property tax reform. Four weeks left, I’m still waiting.”
A report from the Missouri Budget Project estimates that moving the state to primarily rely on sales taxes would increase the tax burden on 60 to 80% of Missourians. Just how sales and use taxes would be raised would be determined by future general assemblies, but unless taxes are expanded to currently untaxed goods, sales taxes would need to be raised by at least 12%.
“Republicans in the State Senate paved the way for the largest tax increase in Missouri history,” Senate Minority Leader Doug Beck, an Afton Democrat, said about the bill.
The bill will now go back to the House. House Speaker Jonathan Patterson, a Lee’s Summit Republican, said the Senate amendments simplify the bill, “but the structure is preserved.”
“It will allow Missourians to vote on a measured, triggered plan to phase out and eventually get rid of the income tax,” Patterson told The Star.
