Missouri isn’t Florida. Eliminating our income tax is doomed to fail | Opinion

Missouri lawmakers are advancing a proposal that sounds simple: Eliminate the state income tax and replace it with higher sales taxes. As a fiscal conservative and believer in small government, I initially found this proposal attractive.

“No income tax” is a powerful slogan.

But slogans are not policy. And once I started reviewing the numbers and consequences, the proposal looked far less appealing. As a proud resident of the Show-Me State, I looked for the facts, not the politician’s promises and slogans. Here are the facts:

Eliminating Missouri’s income tax would actually increase taxes on most Missourians, destabilize the state budget and harm Missouri’s schools, hospitals, roads and public safety.

To start, let’s remember that Kansas tried a similar experiment a decade ago — promising growth, prosperity and tax relief. Instead, the state faced massive budget shortfalls, cuts to schools and infrastructure. Lawmakers there eventually reversed course by raising taxes. That’s right, raising taxes. Missouri should learn from that lesson, not repeat it.

Missouri’s individual income tax is the backbone of the state’s budget. It generates roughly two-thirds of the state’s general revenue — billions of dollars each year that pay for public schools, highways, law enforcement and health services. Eliminating it would create an enormous hole in the state’s finances. Supporters argue that higher or expanded sales taxes would replace that revenue, but independent fiscal analysis shows the gap is far too large to close. Even dramatically expanding the sales tax base would leave billions of dollars missing from the budget.

There are only two ways to deal with a gap that large: Raise other taxes dramatically or cut public services dramatically. In reality, the state would likely end up doing both. Those cuts would fall on the institutions that keep Missouri communities alive, including public schools, rural hospitals, emergency services and transportation networks connecting small towns to the rest of the state. For many rural communities, schools and hospitals are among the largest employers and anchors of local life. Kansas’ tax experiment ended with school districts closing, shortened school days and shuttered rural hospitals.

Working families spend greater part of income

Just as important is who would ultimately pay the new taxes.

Income taxes are structured so that higher earners pay more (although in Missouri is already moving to a 4% flat tax). Sales taxes work differently. Everyone pays the same rate at the register whether they earn $40,000 or $400,000 a year. Because working families spend a larger share of their income on necessities, sales taxes hit them harder. Economists call this a regressive tax system for a reason.

Supporters argue the proposal would give Missourians more choice and put more money in people’s pockets. One supporter recently said this proposal would “unleash” creativity in Missouri. But these slogans don’t hold up to the facts. Replacing the income tax with expanded sales taxes merely shifts the burden to working families. This proposal would mean paying more every time you buy groceries, school supplies, clothes for your kids or repairs on the car that gets you to work. For a Kansas City resident, that means sales tax would need to raise to at least 20%. So, for every $100 you spend, you would pay at least $20 more.

As Kansas proves, these are not choices, and more money would not go into our pockets. High income earners would not suddenly be “unleashed,” make substantively more money and then spend all that hypothetical new income at Missouri retailers. High income earners save and invest, especially now that Missouri has already become the first state to eliminate capital gains tax. These are the facts.

Eliminating the income tax would not eliminate taxes. It would raise them on most Missourians.

Supporters often point to Florida, which operates without a personal income tax. But that comparison ignores a crucial difference: Florida’s system is heavily subsidized by tourism. Tens of millions of visitors pay hotel, restaurant and sales taxes that fund a significant share of state government. Missouri doesn’t have that advantage. Our economy relies overwhelmingly on residents to generate tax revenue.

We cannot replicate Florida’s model because we don’t have Florida’s weather or tourism economy. We are far more like Kansas.

The facts are clear: This proposal would raise taxes on working families, cut essential services Missourians rely on and leave a budget hole that cannot be filled. Kansas is the proof.

This issue isn’t about political party. And it isn’t about slogans. It’s about facts. And the facts show this proposal, which is expected to come before voters later this year, is not fiscally responsible. In fact, this proposal would actually hurt our budget while simultaneously raising our taxes. No matter your political affiliation, this proposal is bad for Missouri.

Brad Desnoyer is a law professor at the University of Missouri-Kansas City and a former attorney for the Supreme Court of Missouri. He lives in Kearney.