Missouri voters to decide whether to end the state income tax

Missouri voters will vote August 4 on Amendment 5, a constitutional amendment that would eliminate the state income tax.

The measure has divided Republicans, who have a supermajority in the state legislature, and generated organized opposition from trade groups ? like Missouri Realtors ? as well as progressive advocates.

State revenues are trending downward. After Missouri eliminated the capital gains tax in August, corporate tax revenues dropped 21% year-to-date. And net general revenue collections for the current fiscal year are down 2.1%.

Opponents also raised concerns about constitutional maneuvers involved in Amendment 5.

Among other things, the amendment would override the Hancock Amendment ? a rule requiring voters approve major tax increases ? to allow lawmakers to compensate for the lost revenues.

"First off, it's not a tax reduction, it's a tax reallocation," said state Rep. Rudy Veit, R-Jefferson City. "I had real concerns about the constitutional provision it was negating ? which prohibited new taxes on services. I had real concerns about the suspension of the Hancock Amendment. ? We're just giving up constitutional protections that we had."

Supporters could not satisfactorily explain where the state would recoup the lost revenue, Veit said, arguing the proposed changes amounted to an increased tax on middle- and lower-income Missourians and a tax break for upper-income households.

"If you're going to pay another 10% to 20% on everything you buy," it's not much of a tax break in the end, he said. "It's going to take a lot of things to tax in order to replace the amount of revenue that's lost with the elimination of the income tax."

Another concern around the potential shift from income taxes to sales taxes, he said, is that "generally speaking, those with the best and biggest lobbyists will get the best exemptions."

Veit said he has "a real problem" with the House version of the measure, but acknowledged the Senate made some improvements. Still, he said, "I don't think I've had one constituent tell me yes, it's a good deal. It's the first thing a lot of them will come up and talk to me about."

In addition to the opposition the measure has generated, many large lobbying groups traditionally aligned with Republicans, such as the Missouri Chamber of Commerce, have declined to endorse Amendment 5.

"I haven't seen any major organization say yes we want this to happen," Veit said.

"I expect it to be defeated," he said. "But I haven't seen any recent polls."

Rep. Bishop Davidson, R-Springfield, who sponsored the bill, did not respond to a request for comment by press time, nor did Rep. Betsy Fogle, D-Springfield, the ranking member of the House budget committee and an Amendment 5 critic.

The state's general obligation debt is rated triple-A across the board.