Elimination of Missouri income tax is criticized
January 06, 2011
According to reports, initial paperwork will be filed on January 7, 2011, with the office of the Missouri Secretary of State to circulate a ballot measure proposal to eliminate the state's income tax and replace it with a greatly expanded sales tax. Missourians know that if it sounds too good to be true, it probably is.

In order to make up for revenue lost from the income tax, sales taxes would be applied to a much broader range of goods and services than are currently taxed. The new, expanded sales tax would apply to nearly everything that is purchased, including food, prescription medicine, new cars, and even new homes. And it would also apply to all services, like child care, nursing homes and assisted living for seniors, doctor's office visits, legal counseling, and financial services, and much, much more - even funerals.

The new sales tax would be like no other nationwide, and would result in an overall tax increase for 95 percent of Missourians. Middle-income Missourians, including senior citizens on fixed incomes, would be hardest hit because they have to spend a higher proportion of their incomes on essential products and services than do the wealthy.

Moreover, if the sales tax rate is capped at 7 percent as reports indicate, the services and infrastructure that provide the foundation for our economy would be jeopardized. Critical programs that represent the state's investment in its workforce, such as education, transportation, and health services would face further cuts, endangering the state's economic recovery.

Research on comparable proposals has indicated that a sales tax of 10 to 11 percent would be required to be revenue neutral. All state rates are in addition to local sales tax rates, which are around 2 percent.

Every state without an income tax has other forms of reliable revenue that our state would not have under this proposal. This experiment has never been tested, and Missouri should not risk its future on untested economic theories.

Commentary by Amy Blouin, executive director, Missouri Budget Project


A similar proposal drew diverse criticism when it was presented in the Missouri Legislature in 2010. More than 30 organizations and business representatives presented testimony against the measure. Some of those organizations share their continued concerns here:


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