January 14, 2013

Missouri Budget Project: Consequences of HJR 36: Proposal to Dramatically Alter Missouri’s Tax Structure Would Burden Missouri Families and Economy

ITEP Work in Action

Recently, the Missouri House of Representatives passed HJR 36, a constitutional amendment which proposes dramatic changes to the state’s revenue structure by eliminating the individual and corporate income taxes and replacing them with a greatly expanded sales tax. If passed by the State Senate and then approved by voters, this shift would create a significant tax increase for low and middle income Missourians and would burden Missouri’s economy.

In addition, eliminating the individual and corporate income taxes in the state would reduce state general revenue by 73 percent, or approximately $5.8 billion. The proposal would need to increase both the sales tax rate and the sales tax base to make up for the lost revenue. The proposed increase in the sales tax rate, even when applied to all services, may fall short of meeting the funding requirements in the bill and require that the sales tax rate be increased from 3 percent to as high as 9 percent. Without the increase, the bill would reduce state funding by $1.5 billion, resulting in cuts to services of 18.75 percent.

Read the Full Report (PDF)