06/10/2026
The Elimination of the State Income Tax will Appear on the August Ballot
On May 22, Governor Kehoe moved Amendment 5 to the August 4th ballot. Amendment 5 would require the Missouri legislature to reduce the state individual income tax based on revenue growth until the tax is eliminated. The state individual income tax brings in between $8.5 billion and $9 billion in general revenue annually, making it the primary source of funding for schools, public safety, and other critical state services.
To enable the reduction and elimination of the income tax, Amendment 5 authorizes the Missouri legislature to expand sales and use taxes to “transactions involving any goods and services,” which could include everyday services like rent, auto repair, and hair care.
Proponents of Amendment 5 believe that it will make Missouri more competitive and attract jobs and investment. But as the Voice for the Poor Committee, our focus must be on how Amendment 5 will impact our Neighbors in Need.
A tax structure that relies on sales and use tax instead of income tax is generally considered detrimental to low- and moderate-income households and advantageous to high-income households. Such a tax structure is regressive, meaning that individuals with lower incomes pay a larger percentage of their income in taxes compared to wealthier individuals even if the absolute amount of tax is the same. This occurs because the tax is applied uniformly to goods, services, or fixed amounts without considering the taxpayer’s ability to pay.
The state of Tennessee is often held up as an example of a tax-friendly state because it has no income tax. But its high sales tax places a heavier burden on its low- and middle-income residents.
In Missouri, Neighbors in the lowest 20% income percentile pay 9.8% of their income in taxes, while in Tennessee they pay 12.8%. The middle 20% of earners also pay more in taxes in Tennessee. By contrast, the top 1% of earners benefit from Tennessee’s sales tax structure.
When you go to the polls in August, please consider the impact of Amendment 5 on our Neighbors in Need. The full text of Amendment 5 can be read here:https://documents.house.mo.gov/billtracking/bills261/hlrbillspdf/6854S.13T.pdf
Other helpful documents: https://mobudget.org/the-truth-about-states-without-income-taxes/
https://itep.org/whopays-map-7th-edition/
ITEP Tax Inequality Index Click on your state for details. [show-map mapID=whopays6 mapDataStart=2 spreadsheet=1QQyxgYSqfuDGoOQom26DDEXRbvNAMlA4rV_OH__BooY type=whopays2024 width=100%] Forty-four states’ tax systems…