The Show-Me State’s goal has been simple and explicit from the start.
The Show-Me State’s goal has been simple and explicit from the start.
T he great humorist and Missourian Mark Twain was not a fan of taxes. “What is the difference between a taxidermist and a tax collector?” he asked in 1902. “The taxidermist takes only your skin.” He later joked that, in America, “we’ve got so much taxation, I don’t know of a single foreign product that enters this country untaxed except the answer to prayer.” (No one doubts the federal government would tax intangible, divine returns, too, and will when the technology allows it.)
Twain’s sardonic, salt-of-the-earth sensibility is emblematic of Missouri culture and politics, embodied most famously, perhaps, by congressman Willard Duncan Vandiver, who said in 1899: “I come from a state that raises corn and cotton and cockleburs and Democrats, and frothy eloquence neither convinces nor satisfies me. I am from Missouri. You have got to show me.”
In 2022, the Show-Me State has more corn, (comparatively) fewer Democrats, and probably about the same number of cockleburs, whatever those are. But thanks to nearly a decade of concerted tax reform by legislators, state income taxes here are lower than they’ve been in over 50 years — and appear to be headed lower still, thanks to a fresh new tax cut passed earlier this month.
On October 5, Missouri governor Mike Parson signed Senate Bills 3 and 5, which will take Missouri’s top income-tax rate below 5 percent starting next year. Over time, that rate will ratchet down in mostly 0.1 percent increments to 4.5 percent, assuming general revenue targets are hit, which is likely. When the cuts are fully implemented, that 4.5 percent top rate will be the lowest Missouri has seen since 1970, and all signs point to even further cuts — including cuts to the state’s corporate-income tax — in the near future.
The goal of this process has been simple and explicit from the start: to abolish the state’s income tax entirely.
Why do that? Well, the research on economic growth is pretty clear, with study after study showing that income taxes are destructive to wealth production and reinvestment compared with alternative taxes, like those on sales and property. Missouri has languished for decades in GDP growth, GDP per capita growth, and employment growth. Something had to give and, in 2014, something finally did, when the legislature passed its first round of income-tax cuts with Senate Bill 509. This year’s cut continues that trajectory and revenue-trigger tax-cutting approach.
And while there may be fewer Democrats in the Missouri legislature than there were in Congressman Vandiver’s day, eight voted in favor of it in the state house and senate. In contrast, the first tax-cut vote in 2014 garnered only one Democratic supporter. Times have, at least in some ways, changed.
Missouri was not alone in its tax-cutting; at least ten other states have also passed income-tax cuts in 2022. But, having followed Missouri politics closely for over a decade, I can tell you that Missouri’s tax-cutting culture is healthier and more thoughtful than I’ve ever seen it. Eight years into the process, the state’s tax-cutting philosophy is well articulated, well developed, and supported by an ever-increasing amount of research, easily expressed by legislative leadership and backbenchers alike.
Will the determined (and, now, bipartisan) income-tax-cutting ways of Missouri eventually infiltrate federal policy-making? Gosh, I hope so. But even in a state like Missouri it took two decades of maturation (in fits and starts) for those governing to reach some level of seriousness on taxes. I suspect that a similar process is taking place in other states around the country, with a new wave of legislators making bold decisions and for the right reasons. As state legislators migrate into federal service, I hope that they take with them their verve for sound, people-empowering policy-making. Washington certainly needs it these days.
When Mark Twain died in 1910, Missouri didn’t have an income tax; if the state’s legislators have their way, it won’t once again. While Twain would probably advise against such positivity, I’m optimistic — though I also hasten to note that, at this point, any report of the death of Missouri’s income tax would be greatly exaggerated. Much work remains to be done, but I think Missouri and her legislators are up to the challenge.