Missouri voters overwhelmingly rejected a constitutional amendment that would have allowed the state legislature to gradually phase out the state income tax, likely resulting in a higher sales tax.

Red State Voters To Decide Future On Income Tax

Over 82 percent of voters selected "no" with approximately 95 percent of precincts reporting.

"Throughout this conversation on eliminating the state income tax, we made the case that Missouri should think boldly about its future, challenge the status quo, and pursue policies that make our state more competitive. While Amendment 5 did not earn the support it needed, I believe our work is far from over," Gov. Mike Kehoe said.

"I remain committed to working with the General Assembly in the years ahead on ways to continue cutting taxes, growing our state’s economy, and pursuing conservative policies that help Missouri families keep more of what they earn," he continued.

FOX 2 has more:

Missouri’s annual income tax reaches up to 4.7% for individual taxpayers depending on their income level. The tax generates around $9 billion annually to fund state services, including transportation, education, social services and healthcare programs.

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Amendment 5 would have directed the state to eliminate the individual income tax through gradual reductions tied to revenue growth over a five-year phase-out timeline.

The measure called for the state to “modify” its sales and use tax system in the transition away from income tax revenue, while calling to maintain “local funding for public schools and other purposes” that rely on tax dollars. With that in mind, Amendment 5 did not specify a detailed plan to account for revenue that the state would otherwise not generate without an income tax.

As a result, that likely would have prompted future decisions on how revenue changes are offset. One likely scenario would could have been to increase the state’s 4.225% baseline sales tax. Another would could have been to impose a use tax on products and services that are currently not taxed by the state, including digital subscriptions, haircuts, various grocery items and many medical and legal services.

Some experts have warned that eliminating an income tax could disproportionately affect lower-income residents because higher taxes on everyday purchases would likely consume a larger share of their budgets than higher-income earners.

“I knew that it was going to fail. I am genuinely surprised by how much it failed by, but I'm heartened because that tells me that Missouri voters are paying attention and they are unwilling to be fooled by the Missouri GOP,” Missouri House Minority Leader Ashley Aune said, according to St. Louis Public Radio.

St. Louis Public Radio shared further:

Proponents of Amendment 5 said eliminating the state income tax would have spurred growth in Missouri, including by drawing more people to live in the state.

They also referenced other states that don’t have an income tax that are growing, like Florida and Tennessee.

Joe Lamie with Missouri Promise PAC, which supported Amendment 5, said that while the group is disappointed with the results, “our commitment to lowering taxes for Missouri families and strengthening our state's economy remains unchanged.”

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“Gov. Kehoe deserves credit for thinking big, and we will continue to work alongside him to reduce the tax burden on hardworking Missourians and advance policies that help our state grow and prosper,” Lamie said.

Opponents of Amendment 5 called the measure a fund swap between the state income tax and state sales and use taxes that would have ultimately cost lower-income Missourians more.

Amy Blouin, with the nonpartisan Missouri Budget Project, believes part of Amendment 5’s troubles was the lack of information.

“This is the Show-Me State and they did not get shown what the details were, and I think that was a significant part,” Blouin said. “But I also think there were real concerns about the shift from income tax to sales tax and the implications that has for real people.”

 

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