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.
