Missouri voters to decide on eliminating income tax, replace with higher sales tax

ST. LOUIS, Mo. (First Alert 4) - Missourians will go to the polls in November to decide how they want to pay taxes to the government. Voting no would keep them paying income taxes. Voting yes would make them pay more in sales taxes.

“I think for the average Missourian, I think it’s going to be a bad idea,” said Sarah Narkiewicz, Associate Dean for Clinical Education & Director of Low Income Taxpayer Clinic at Washington University.

Narkiewicz says middle- and lower-income Missourians will pay more money if the state eliminates income tax. But other experts, like Marcus Painter with Saint Louis University, believe the plan could help the economy and future generations of Missourians.

“Mainly because the potential for growth,” said Painter, an associate professor of finance at SLU.

In November, voters will decide on a plan eliminating the income tax and replacing the revenue with sales taxes. The state would slowly reduce income taxes as revenue grows, and lawmakers would be tasked with making a plan to replace the roughly $5 billion of state revenue with sales tax.

They could add to the existing 3% tax or charge services.

Right now, the state does not tax services such car repairs, haircuts or streaming TV like Netflix.

“They’re still going to end up spending more than $500 in taxes,” said Traci Gleason.

Gleason, spokesperson with the Missouri Budget Project, also believes this will hurt the average Missourian, saying two-thirds will pay more. She said they spend more of their income on goods and services than wealthier folks do.

“You’re talking about really stretching their pocketbooks,” said Gleason.

Republicans who passed the bill point to states like Tennessee with no income tax, saying Missouri is at a competitive disadvantage and eliminating the tax would bring business here.

“We typically see more businesses become established and we see more employees employed by these businesses,” said Painter.

Painter says data shows when you cut income taxes, more businesses and more jobs are created, and pointed to the Illinois and Kansas borders, saying people could move and reap the benefits.

“If we eliminate this income tax, you’re basically getting a five percent raise if you move a few blocks to the east,” said Painter.

But Narkiewicz with Wash U, who leads a program helping low-income people with tax issues, believes Missouri’s economy doesn’t support zero income taxes.

She fears the state would not be able to make up the gap in taxes, and services like education and roads could be cut.

“Do you want to live in a state who is not able to provide services for its citizens?” said Narkiewicz.

Painter was less concerned about the state not being able to raise enough money in sales taxes. He pointed to the part of the proposal that only cuts income taxes when and if state revenue reaches a certain threshold.