Voters will be asked on Aug. 4 if the legislature should be required to phase out individual income tax while removing limits in the Missouri Constitution on sales and other taxes on goods and services.

Revenue from individual income tax made up 63% of Missouri’s general revenue in fiscal year 2025. To make up for the loss in revenue, the legislature would have to find it elsewhere, most likely through a broader sales tax base.

But the amendment offered to voters does not define specific steps for meeting the revenue gap, thus generating speculative arguments over the impact if voters support the amendment.

If voters approve ending the state income tax, experts such as Sarah Narkiewicz said this will cause Missouri to have a regressive tax structure. Narkiewicz is the director of the Low Income Taxpayer Clinic and teaches state and local taxation at Washington University School of Law in St. Louis.

“The people I represent are struggling on a daily basis just to pay their bills; they’re living on the paycheck-to-paycheck system,” Narkiewicz said. “So if suddenly they were faced with a much higher sales tax, I think that would be a big burden on them.”

A tax structure where low-income taxpayers are taxed at higher rates than top-earning taxpayers is known as a regressive tax structure, according to the nonpartisan Institute on Taxation and Economic Policy.

State Rep. Bishop Davidson, R-Republic, who sponsored the resolution for the proposed amendment during this year’s legislative session, agrees with these definitions of the terms but argues that it leaves out important context.

“The bigger question is how we can create an economic environment that promotes economic growth for everyone, but most importantly, those who exist at the bottom of the economic spectrum,” Davidson said.

“This is a tax reform package that puts Missouri on a path of growth,” Davidson said. “When we say Missouri, the people I’m thinking of the most are those who exist and live right now on the lower end of our economic spectrum.”

Data from the nonpartisan Pew Research Center shows a strong correlation between states that do not have a state income tax and how regressive their tax structure is because of a heavy reliance on sales tax.

Narkiewicz said Missouri currently has a progressive tax structure, which she describes as a system based on an individual’s ability to pay based on their income.

“On the other hand, when you look at sales taxes, low- and middle-income people still have to consume,” Narkiewicz said. “There are certain things all of us need to buy, and if we have a much higher sales tax, that’s going to take a much bigger percentage of their income than the current income tax will.”

Narkiewicz said she believes that if this constitutional amendment is approved by voters, it will cause Missouri’s tax structure to become regressive and provide tax cuts for the wealthy.

“You are taking the burden off of the wealthier taxpayers and placing it on the lower-income taxpayers, and it’s unfair; they can’t really shoulder more,” Narkiewicz said.

Davidson said he’s keeping lower-income individuals in mind and argues the state will benefit from the growth he believes the elimination of income tax could create.

Narkiewicz noted that the measure would expand the legislature’s ability to tax transactions not currently taxed and would make most services eligible for taxation.

“When the sales tax was passed around the time of the Great Depression, the economy was not service-based,” Narkiewicz said. “The legislation leaves a lot in the hands of the state legislature; the Hancock Amendment is essentially overridden for five years and they can kind of do whatever they want.”

The Hancock Amendment places restrictions on how much the Missouri General Assembly can tax Missourians by mandating that the ratio between total state revenue and Missourians’ personal income be the same as the ratio calculated in base years.

Davidson noted this amendment does not mandate that the state make any changes to a sales tax. However, the Missouri Constitution requires that the state budget be balanced, so any loss in income tax revenue must be made up elsewhere.

Davidson said he believes the proposed amendment is the start of a conversation, one that could include sales taxes in the future.

“If this amendment passes, it doesn’t change the sales tax whatsoever in one singular way,” Davidson said. “I think there could be a sales tax and I’m hopeful that there is a conversation around broad tax reform, but this doesn’t mandate that, it only allows that.”

Davidson said there are four levers to this statutory conversation that are all interconnected: the timeline for removing income tax, the base of the tax, the rate and the revenue.

“If you pull one lever, it affects the other three,” Davidson said. “So you tell me what two are most important, I’ll tell you what the other two have to be because they’re all interrelated.”

With the loss in revenue from individual income tax, experts such as Narkiewicz are concerned that the state could find difficulty generating revenue. However, Davidson said he believes, based on the legislature’s prior experience with tax reductions, that this will not be an issue.

“We’ve eliminated income taxes on social security, we’ve eliminated capital gains taxes, and through all that, our revenues have never taken a hit,” Davidson said.

“If you pass this constitutional amendment, you mandate to the legislature that when excess revenues come into the state, instead of the state spending it on more things that the state wants to spend it on, that money has to go back to the people in the form of an income tax reduction,” he said.

Narkiewicz said it’s hard to imagine Missouri making up the loss in revenue from income tax in a sales tax structure. She suggested that those who would see a tax decrease would still see a decline in government-provided services.

“If the state doesn’t have the money, the services are cut,” Narkiewicz said. “While someone may individually come out economically ahead if they are high income, they’re ultimately living in a state where services are greatly diminished if the revenue doesn’t come through.”