Missouri low-income workers fear eliminating income tax will send sales taxes dangerously high
A proposal to eliminate Missouri's state income tax and offset it with increased sales taxes is heading to the ballot, worrying low-income workers who fear higher sales taxes will exacerbate their financial struggles. The plan could increase Missouri's sales tax rate from 4.225% to 12.725% if lawmakers don't expand the sales tax to currently exempt items.
Missouri low-income workers are concerned about a proposal to eliminate the state income tax, potentially increasing sales taxes. The plan, awaiting Gov. Mike Kehoe's decision on the ballot date, would give legislators broad authority to raise state sales taxes or expand taxable items for five years. Currently, income taxes generate $9.2 billion in state revenue. To compensate, the state sales tax rate might rise by 8.5 percentage points to 12.725%. The Missouri Budget Project estimates 80% of Missourians would see their net tax cost increase, while the top 20% would see a decrease. Low-income families, who already pay little in state income taxes, worry about higher sales taxes on everyday necessities.
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