Red State’s Income Tax Showdown Ends In A Landslide

Missouri voters overwhelmingly voted to keep the state’s income tax on Tuesday, with 83% voting “no” on the amendment that would have phased out the state’s income tax. The vote ended in a landslide even with Missouri Republican Governor Mike Kehoe supporting the amendment. 

“This is the first step in keeping our promise to make Missouri more competitive, attract jobs and investment, and let families keep more of what they earn from the start,” he said earlier this year, urging Missourians to vote “yes.” 

If the amendment had passed, it would have allowed the state legislature to expand the state’s sales tax to help make up the revenue difference. The amendment prohibited the state from reducing funding for public schools, but opponents of the amendment argued that school budgets would decrease if the income tax was phased out.

“Missourians expect strong public schools, reliable roads and bridges, and fully-funded, accessible services — and for everyone to pay their fair share,” said Executive Director of Progress Missouri Claire Cook-Callen. “Instead, this plan gives a tax break to the state’s eight billionaires and sticks each working family with a bill of about $500 more each year.” 

Democratic State Representative Ashley Aune added, “Where are we going to get that revenue? We’re going to get that revenue off the backs of Missourians who are living paycheck to paycheck, seniors who already can’t afford their medications or to stay in their homes.”

State Republican Senator Joe Nicola also opposed the amendment, arguing it would allow the state to start taxing services. “I don’t think it’s good for the state. We’re going to start taxing services now.” 

Supporters of eliminating the income tax drastically outspent those in opposition. Total contributions to support the passage of the amendment totaled $15.5 million, while contributions to the “no” campaign stood at around $5 million.

The Missouri Association of Realtors was one of the largest donors opposing the amendment, contributing about $2.8 million. Opponents of the amendment, like the Missouri Association of Realtors, worried that the state would have turned to taxing professional services — potentially including real estate commissions and other services connected to buying and selling homes. 

Supporters of the amendment, however, argue that other states have shown that taking away the income tax results in an economic boom.

“Zero-income-tax states have consistently outperformed high-tax states over the past decade,” said conservative advocacy group Freedom Principle Missouri. “From 2012 to 2022, they saw stronger population growth (11.8% vs. 4.6%), net domestic in-migration, higher employment growth, and superior personal income and gross state product growth.”

Missouri currently has a graduated income tax with rates between 2 and 4.7%. Income taxes make up 28.2% of the state’s tax revenue, property taxes make up 27.8%, sales tax makes up 28.3%, with other taxes making up the rest.