March 30, 2004

The Distributional Impact of SB 1374’s Personal Income Tax Changes


The Missouri personal income tax currently applies a graduated rate structure with tax rates ranging from 1.5 percent to 6 percent of taxable income. This rate structure is applied to a tax base that starts with federal adjusted gross income, but allows a variety of special deductions and exemptions that allow some Missourians to reduce their taxable income. One current proposal for simplifying the Missouri income tax, Senate Bill 1374, would conform more closely to federal adjusted gross income by eliminating almost all exemptions and deductions, and would apply a flat rate of 4.5 percent to all Missouri taxable income. This analysis estimates the distributional impact of this proposal.

Read the Full Report (PDF)