The Impact of Imposing a “Flat Tax” on Missouri Personal Income

The Missouri personal income tax currently applies a graduated rate structure with tax rates ranging from 1.5 percent to 6 percent of income. This rate structure is applied to a tax base that starts with federal adjusted gross income, but allows a series of special deductions and exemptions that allow some Missourians to reduce their taxable income. One proposal for simplifying the Missouri income tax, Senate Bill 27, would eliminate almost all exemptions and deductions and conform more closely to federal adjusted gross income, and would apply a flat rate of 4 percent to all Missouri taxable income. This analysis estimates the distributional impact of this proposal.

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