House passes resolution to put elimination of income tax on the ballot

By Kennedy Voss, Missouri News Network
JEFFERSON CITY — Missouri residents will be asked to vote on eliminating the state’s individual income tax this fall.
After months of discussions and rewritings, the House of Representatives voted 95-59 Tuesday to put the gradual elimination of the state personal income tax on the November ballot.
The vote, mostly along party lines and disliked by Democrats, also asks voters to allow the legislature to raise sales and other taxes to compensate for the lost revenue. Roughly two-thirds of state revenue comes from income tax receipts.
Unlike the Senate, which passed the resolutions in an early morning session with little debate, the House held more than two hours of robust floor debate before giving final approval to House Joint Resolutions 173, sponsored by Rep. Bishop Davidson, R-Republic. During the session, the resolution had been combined with similar bill HJR 174, sponsored by House Speaker Jonathan Patterson, R-Lee’s Summit.

Gradual elimination
If passed by voters, the state’s constitution would be amended to gradually decrease the state’s income tax .01% for every $20 million in the state’s general revenue, with a cap of a 1.6% reduction per year. When the tax rate reaches 1.4%, individual income tax would be totally eliminated.
Supporters of the bill said that this elimination will help put more money in the pocket of middle class Missourians and would help them realize the American dream.
“The source of wealth for the middle class comes from their income,” Davidson said.
Other states have eliminated their income taxes, like Texas and Tennessee. Supporters of the resolution, like Rep. George Hruza, R-St. Louis, point to these states as examples to show that without income tax, Missourians will benefit from an increase in income.
“Do we want to continue to be in the middle of the pack, as has been mentioned, or do we want to lead,” Hruza asked.

Revenue shortfall
Currently, individual income tax makes up about two-thirds of Missouri’s general revenue budget.
To make up for the revenue shortfall, the bill has language that would allow a future general assembly to raise sales tax and to expand taxes on any goods and services in the state. Critics worry that the language of the bill gives future general assemblies too much power.
“None of us are guaranteed to be back next year,” Rep. Betsy Fogle, D-Springfield, said in a news conference following the vote.
“The people who are making promises won’t be here in subsequent years to make good on these promises,” Fogle said. Supporters said that the wealthiest Missourians would be the ones paying for services, but some critics, like Rep. Eric Woods, D-Kansas City, pushed back against this idea.
“Food is not voluntary,” Woods said. “Paying for rent is not voluntary. Paying for health care and childcare are not voluntary.”
“(Middle class Missourians) will feel the impact in sales tax more than a wealthy person who has disposable income,” he said.

Criticisms
Currently, Missouri has an income tax of 4.7% for top earners. The individual income tax has been slowly reduced for many years from 6% in 2015 and has been aided by triggers requiring cuts under a 2022 tax cut passed by a special session of the Missouri General Assembly.
These previous reductions to income taxes were accomplished through legislation, which Democrats noticed. The resolutions ask Missouri voters to enshrine income tax elimination in the constitution, requiring another amendment in the future if there was a desire or need to reinstitute income tax.
“They absolutely can remove the income tax statutorily,” House Minority Leader Ashley Aune, D-Kansas City said. “They could do that here in this building, this session, right now if they wanted to.”
Democrats say that the reason to bring this to the ballot is to include the sales tax increase, which would need voter approval unlike a decrease in sales tax.
In response to the criticisms, Davidson said changes to the Missouri Constitution should be left to the voters.
“In order to change the Missouri Constitution, we ought to go to the Missouri people,” Davidson said.
Many supporters of the bill agreed that such an issue should be left to Missourians, including Rep. Rodger Reedy, R-Windsor.
“Let them vote,” Reedy said.

Fulfilling campaign promises
Income tax elimination was one of Gov. Mike Kehoe’s goals for the legislative year, which he made a part of his campaign and urged during his State of the State address in January. Supporters praised Kehoe for his ability to realize his campaign promises.
“In a time where politicians make all kinds of promises and rarely deliver, here we are debating something our governor said he was going to do,” said Rep. Brad Banderman, R-St. Clair. “We are literally on the cusp of an opportunity to transform our state.”
Opponents noted that unlike in Kehoe’s campaign promises or State of the State, there were no sales tax exemptions for agriculture or real estate.