By Kurt Erickson
St. Louis Post-Dispatch
(TNS)
JEFFERSON CITY — Missouri voters will decide Aug. 4 whether to give state lawmakers the power to begin raising sales and use taxes to replace the state’s income tax.
The heavily contested proposal, known as Amendment 5, is the top priority this year for Republican Gov. Mike Kehoe, who says states without income taxes are better positioned for economic growth.
With early voting beginning Tuesday, here are six things to keep in mind regarding the proposal.
What will it do?
A “yes” vote will give lawmakers the ability to expand sales and use taxes without voter approval to generate enough revenue to replace the roughly $9 billion brought into the state’s checkbook every year via Missouri’s 4.7% individual income tax.
Opponents say the tax swap will shift the state’s tax burden onto lower-income Missourians because it would allow lawmakers to impose new sales and use taxes on products and services not currently taxed, as well as increase Missouri’s existing sales tax rate of 4.225%.
That could mean new taxes on services, such as haircuts, lawncare or a music download.
Missouri Promise, the political action committee formed to campaign in favor of phasing out the income tax, has urged voters to ignore concerns about what new taxes will be levied on sales and services, saying the vote only gives the General Assembly the power to move forward with the concept.
“The amendment does not tax a single service, establish a single tax rate, or create a transfer tax. It removes an outdated constitutional restriction so future legislatures can modernize Missouri’s tax code through the normal public legislative process as the state phases out the income tax,” Missouri Promise spokesman Joe Lamie said.
“Whether any particular service is ever taxed would be a decision made by elected lawmakers after public debate — not by Amendment 5 itself,” he added.
States with no income tax
Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, and Wyoming have no state personal income tax. Washington has no state personal income tax, except on capital gains for people who earn more than $1 million a year.
Many of the other states have other sources of revenue, from oil, tourism or mining, for example, to fill their coffers in the absence of an income tax. Other states also replace income taxes with fees, such as an entry fee to a state park or museum. Some states rely on income from toll roads to offset the lower personal taxes charged on their citizens.
Eight of the states with no income taxes are ranked in the top 10 states with the smallest tax burden in the nation. Missouri, despite having an income tax, stacks up well, ranking 12th in the nation in terms of tax burden.
Past miscalculations
The push by Kehoe to overhaul the state’s tax system comes at the same time the state budget is under stress. The state’s $50 billion budget ballooned amid a flood of post-COVID federal emergency aid dollars. The governor recently vetoed or put on hold nearly $500 million in the budget sent to him by lawmakers to prepare for the rapid end to what once was a nearly $6 billion surplus.
Part of the stress is linked to the 2025 passage of a capital gains tax cut. When lawmakers voted to exempt profits from the sale of stocks and other assets from Missouri income tax, the official estimate put the revenue loss at about $160 million, with ongoing revenue losses at $111 million.
State budget officials since have revised that estimate to $500 million, with an ongoing revenue loss of $360 million per year.
In arguing against the decision to place the proposal on the ballot, Republicans and Democrats said the state’s experience with the capital gains tax is a warning sign to slow down.
In-migration
Kehoe’s position is this: Eliminating the income tax will cause economic growth by luring people to move to Missouri, which has a population of 6.1 million, which the governor views as stagnant. As proof ending the tax could stir things up in Missouri’s interest, he points to states without income taxes like Tennessee, Florida and Texas, each of which have seen population growth.
A 2023 study by Michael Mazerov of the Washington, D.C.-based Center on Budget and Policy Priorities found that theory is not sound.
According to his study, state tax levels have little effect on whether and where people move.
“People move to other states in large part for employment opportunities and family reasons,” Mazerov wrote.
In addition, he said people have been moving away from the industrial Midwest and Great Plains to the Sun Belt and west for decades, independent of state tax levels.
Mazerov also said if the elimination of the income tax leads to cuts in spending on education, public safety, parks, roads and other services, it will make Missouri less desirable for people to move.
Kansas repeat?
Kehoe’s push to enact sweeping tax cuts carries echoes of former Kansas Gov. Sam Brownback’s failed 2012 tax plan, which cut income tax rates by 30% and eliminated income taxes on hundreds of businesses in the state.
Brownback said the reductions would boost the Kansas economy. Instead, the plan led to significant budget shortfalls and deep cuts to public services, including education.
By 2017, with economic growth failing to materialize, Kansas lawmakers repealed the plan and voted to restore the previous tax rates.
Supporters of Amendment 5 say there are key differences in Missouri’s approach, including a requirement that the swap is revenue neutral. The proposal grants lawmakers a five-year window to bypass a public vote to raise taxes. The plan limits sales tax revenue generated to only the amount needed to offset the income tax reductions.
It also includes guardrails designed to stop any reduction in funding for public schools. And, it requires local governments to reduce their taxes if they receive a windfall in sales tax revenue.
Who else is against it?
The lead opponent of Amendment 5 is the Missouri Association of Realtors, which is concerned new sales and use taxes will drive up the cost of home ownership.
The organization is not alone.
Another statewide group, representing local government such as ambulance providers, fire protection districts and wastewater treatment systems, also oppose the proposal.
The Missouri Special Districts Association said one part of the fallout could be the enactment of a tax on real estate transactions. The organization said that could further deepen anti-property tax sentiment among voters, resulting in uncertainty about local tax increases.
Political scientists also say the proposal is flawed and could hurt the ability of the state to provide services to its citizens in the long run.
“Amendment 5 is a case study in asking voters to buy a pig in a poke,” said University of Missouri political scientist Peverill Squire.
Photo credit: BlackPast.org/Facebook
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© 2026 the St. Louis Post-Dispatch. Visit www.stltoday.com. Distributed by Tribune Content Agency LLC.
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