House committee passes new version of income tax elimination resolution

By Peter S. Pynadath, Missouri News Network
JEFFERSON CITY — An effort to let voters decide whether to eliminate the state income tax passed out of committee on Wednesday with new revisions that would tie the reduction in income tax to overall state revenue.
The House Commerce Committee voted to pass the bill with a 7-3 vote. The new version of the bill contained notable differences from its original form, sparking debate during the hearing.
House Joint Resolution 174, carried by Speaker of the House Jonathan Patterson, R-Lees Summit, aims to phase out individual income tax. The bill would allow all goods and services to be taxed in order to make up for the loss in revenue from the elimination of income tax.
The resolution has no exemptions for health care or the agricultural sector, despite Gov. Mike Kehoe requesting the exemptions in his State of the State Address.
“There are no exemptions,” said Rep. David Casteel, R-High Ridge. “That’s to be fair to every industry sector within the state of Missouri — the broader the base, the less we have to raise those sales or use taxes.”
If passed, the resolution would reduce individual income tax by 0.01% for every $20 million in the state’s net general revenue. There would be a cap on income tax reductions of 1.6% each year.
This year, Missouri is expected to have $261 million left over in its general revenue funds, which is the lowest general revenue balance since 2018. This balance can vary each fiscal year, but is expected to decrease according to a report released in 2025 by Missouri State Auditor Scott Fitzpatrick.
Once the individual income tax rate reaches 1.4%, the tax rate will be eliminated.
“I think this legislation puts forth a responsible path forward,” said Rep. Bishop Davidson, R-Republic, who sponsored a resolution similar to Patterson’s. Davidson said he believes the slower elimination of the income tax would alleviate some Democrats’ fears about fiscal impact.
Current laws have steadily lowered the income tax. Between 2015 and 2022, the income tax rate was reduced from 6% to 4.7% for top earners.
Without Patterson’s resolution, the top rate is expected to drop to 4.5% in the coming years if Missouri continues to meet general revenue targets.
The resolution includes the proposed language that would appear on ballots. It asks if the Missouri Constitution should be amended to do four things: “phase out the individual income tax based on revenue growth,” “reduce personal property tax and other local tax,” “modernize the sales and use tax” and “protect local funding for public schools.”
An amendment was offered by Rep. Nick Kimble, D-St. Louis, to change the language to clarify that sales tax may be increased to compensate for reductions in individual income tax.
Republicans on the committee said the language was deceptive and the amendment was rejected.
“This may be the worst amendment I’ve seen here in my five years here in the House,” said Rep. Brian Seitz, R-Branson. “The ballot language is very accurate — it says exactly what we are attempting to do, and this amendment changes that and puts it into the Twilight Zone.”
Rep. Steve Butz, D-St. Louis, argued that the proposed amendment is more honest to Missourians.
“Any plain reading of this amendment is more truthful to everybody, and I think everybody up here knows it,” Butz said. “The only way this works is to dramatically, dramatically increase and expand sales tax. I just think that the vast majority of Missourians are going to reject that idea.”
Minority Floor Leader Ashley Aune, D-Kansas City, argued that the current proposed ballot language, including the phrase “modernizing sales and use tax,” is different than the language in the resolution. Aune said the resolution would repeal provisions preventing taxes on certain sales and goods that are currently untaxed. She said she believes this aspect is not represented in the proposed ballot language.
“The ballot language proposed says ‘modernize the sales and use tax’ … if that is not the most disingenuous language I’ve heard,” Aune said. “The lack of courage in this building and in this room never ceases to shock me.”

Aune issued a statement later:
“HJR 173 and 174 would nullify existing state constitutional prohibitions against imposing sales taxes on services or real estate transactions, and broadly authorize the Missouri General Assembly to impose taxes on transactions involving any goods and services,” she said in the statement. “The legislation also would exempt sales tax expansions from being subject to provisions of the Hancock Amendment that limit growth in state revenue, and prohibit lawmakers from imposing major tax increases without voter approval.”
The statement said that the resolution would override constitutional restraints and allow for a sales tax on fuel for the first time in the state’s history. If approved, this could be added to the existing 29.5-cent-per-gallon fuel excise tax.
The resolution, if passed by the legislature, could go on the Nov. 3 state ballot.