Missouri lawmakers are advancing a proposal that would fundamentally change how Missourians pay taxes. The plan would eliminate the state income tax and replace it with higher sales taxes and new taxes on services, giving the wealthiest Missourians a tax cut while raising taxes for most everyone else. In January, our partners at the Missouri Budget Project wrote about this new tax scheme that Governor Kehoe previewed during his State of the State Address. Since then, the Missouri House of Representatives introduced two resolutions that would place the tax scheme on the ballot and they were combined and passed out of the House a few weeks ago. The combined resolution, HJR 173, would authorize the legislature to swap out the income tax for a greatly expanded sales tax which would apply to the products and services Missourians purchase every day. HJR 173 is set for a hearing on Wednesday, April 1st in the Missouri Senate’s Economic and Workforce Development Committee. Here are a few facts about this new tax scheme:
- Most Missourians already pay the bulk of their state and local taxes through sales and property taxes, not income taxes. If new sales taxes are added to services, 60 to 80 percent of Missourians would see their overall tax burden increase.
- Missouri’s income tax currently funds nearly two-thirds of the state’s general revenue. That money pays for essential services like K-12 schools, mental health treatment, childcare and foster care, and programs that support older adults, including meals on wheels and respite care.
A Tax Scheme that Creates a New Pathway to Poverty
Since Empower Missouri is an anti-poverty advocacy organization, I want to focus on the impact to Missouri families living near the poverty line and at-risk of falling into poverty. In Missouri’s current tax system, low- and middle-income families already pay a larger share of their income in state and local taxes than the wealthiest households. In fact, the Missouri Budget Project estimates that someone making $20,000 a year pays almost 10 percent of their income toward state and local taxes while someone making $1.7 million per year pays less than 6 percent. The proposed tax scheme would make it even worse with the median taxpayer paying $535 more per year.
What would it look like to increase taxes on basic goods and services and cut programs that these families need to thrive like education, healthcare, and childcare? This tax scheme would do exactly that. It raises costs on everyday necessities while reducing funding in the very programs that help Missourians work, learn, and stay healthy. Consider these real-world impacts:
- A childcare worker in Joplin relies on her car to get her to and from the daycare center where she works. Her car breaks down and due to increased taxes on auto repair and car parts she cannot afford the repairs.
- A family of five in Kansas City utilizes an afterschool program for their three children. The program allows both parents to work full-time and pursue a nursing degree. The afterschool program is closed due to education cuts.
- A healthcare worker in Hannibal loses access to mental health treatment as services are reduced or become even more expensive.
- A single mother in Ste. Genevieve commutes 40 miles to her job. The new tax scheme authorizes an increased gas tax which takes up an even larger share of her take-home pay.
Education, afterschool programs, and mental health treatment are not luxuries. They are essential public services that allow Missourians to work, care for their families, and build stable lives. When these services are underfunded or cut, families are forced to absorb the costs through lost wages, reduced opportunity, and worsening health outcomes. The Missouri Budget Project estimates that some school districts could face an 18 percent cut in funding under this tax scheme. If Missouri moves forward with this plan, families living near or below the poverty line will face higher taxes on everyday necessities while critical programs are cut. Now is the time for Missourians to take action to protect services that prevent poverty and keep families and communities strong.
Take Action Today
Join Empower Missouri in opposing this harmful tax scheme. Click the button below to use our form and contact your state Senator, urging them to vote no on HJR 173.
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