Residents of the Show-Me state have an opportunity to end the state’s income tax in an August 4 referendum. Missouri’s Amendment 5 will face a vote on Tuesday, potentially freeing Missourians from state income taxes. The Wall Street Journal’s editorial board explains:
Amendment Five would change the Missouri constitution to require lawmakers to cut income taxes if the state hits certain revenue triggers. Once the tax is eliminated, the constitution would prohibit reinstating it. The measure would also require local tax rate cuts “if local sales tax revenue increases” and let lawmakers expand state sales and use taxes.
Missouri’s income tax generates some $9 billion a year or about 61% of general revenue. Amendment Five aims to phase out the income tax in part by replacing revenue with sales taxes, ideally by 2032. It requires lawmakers to create revenue targets and a trigger mechanism for income-tax cuts with that schedule in mind.
The Missouri Independent’s Rudi Keller gives a more detailed breakdown of the mechanisms that would drive a reduction in income tax in Missouri if the referendum passes, writing:
…the measure would give lawmakers three years to decide which currently untaxed goods and services would lose their exemption to generate the money needed to replace the revenue from income taxes. The top income tax rate would decline by 0.01 percentage points for every $20 million in general revenue in excess of the $13.43 billion collected in the year that ended June 30.
Action Line: Americans deserve to keep more of what they earn. Tax reductions like those proposed in Missouri can help them do that. Click here to subscribe to my free monthly Survive & Thrive letter.
