Advertising on TV promoting vote “Yes” on Amendment 5 sprang up almost the instant Gov. Mike Kehoe signed the order to place it on the August primary ballot.
That was my first gut feeling that Amendment 5 was wrong for the state of Missouri. Anytime PACs spend tons of money to change the constitution of Missouri, it means someone has something to gain, and others will lose.
Those who will come out on the short side of the stick in this case will be us, the average citizen.
In a nutshell, Amendment 5 will phase out the state’s income tax. If passed, it will also require reductions in property and other local taxes to offset any increases in local sales tax revenue, while preserving local funding for public schools.
Signed into law by Gov. Kehoe on June 30, the Missouri state budget for fiscal year 2026 is $50.7 billion. Missouri has a graduated individual income tax ranging from 2.0 to 4.7 percent. Missouri’s top rate has dropped from 6.0 percent since 2014, all through statute. The income tax generates around $8.5 billion for state coffers each year.
Remove that source of revenue and the state will be forced to raise taxes someplace else. Remember, there is no such thing as a free lunch. That will most likely be in the form of higher sales taxes, including new sales taxes and use taxes on services.
In November 2016, 57 percent of Missourians voted to add Section 26 to the constitution, stopping any state or local sales tax on services not already taxed as of Jan. 1, 2015. Amendment 5 eliminates that protection.
Imagine the cost of living increase when you have to pay taxes on services like haircuts, streaming services, daycare, car repairs, home repairs, construction, rent, the plumber, the lawyer, your tax preparer and much more. The list is open-ended. There are no restrictions on what new taxes the legislature can impose on us to offset the loss of income tax revenue.
Businesses will also incur these new taxes. They won’t absorb them. It will be passed onto the customer in the form of higher costs.
Low-income individuals and retired seniors on fixed incomes will be hurt the most. They pay the least in income taxes and spend a higher percentage of their income on taxed products.
ConsumerAffairs.com ranks all 50 states on a tax friendliness scale. At the top of the list is Alaska, due to the money it receives from oil. The state with the highest tax burden is Hawaii.
The advertisements on TV tell us no one wants to move to Missouri because of our income taxes. That’s a lie. Consumer Affairs rates Missouri at 15th, just two spots below Texas at 13th. Here is how our border states are ranked: Oklahoma 14th, Kansas 36th, Nebraska 33rd, Iowa 28th, Illinois 44th, Kentucky 24th, Tennessee 4th and Arkansas 18th.
While Tennessee has no income tax, it has one of the highest state sales tax rates in the country, seven percent (second only to California). Missouri’s state sales tax rate is 4.225 percent.
When you look at the overall tax burden Missouri places on its citizens — compared to other states — the Show-Me state is a great place to live.
The reason that Missouri has a good ranking for tax friendliness is low state expenditures per capita. According to kff.org, Missouri spends $6,680 per citizen. There are only six states that are more frugal with taxpayer money: Texas $4,617, Florida $5,611, New Hampshire $6,067, Nevada $6,097, North Carolina $6,367 and Idaho $6,601.
On the opposite end is the District of Columbia. It spends $27,407 per capita.
What keeps Missouri a tax-friendly state was passed by the voters in 1980 — the Hancock Amendment. Amendment 5 suspends that protection for five years.
Another problem with Amendment 5 is it does not specify what taxes will increase to offset the lost revenue from income taxes. The leaders who control the legislature want us to trust them.
Interestingly, my daughter-in-law, a barber in Jefferson City, relayed a conversation she had with a state representative while cutting his hair. He is going to vote no. He doesn’t trust the legislature to do the right thing.
We have to be realistic: billionaires fleeing high-tax states controlled by Democrats will not flock to Missouri if Amendment 5 passes.
That’s why I’m going to vote NO on Amendment 5.
