Why Missouri Declined to Abolish Its Income Tax

V oters in Missouri had a rare chance to free themselves from the hassle and costs of the state’s personal income tax. Sadly, they rejected the move. The state legislature placed Amendment 5 before residents on August 4, 2026. That revision to the state constitution would have put Missouri on track to eliminate its individual income tax and replace the revenue with a broad-based sales tax.

What was Amendment 5?

Amendment 5 would have authorized the phase-out and eventual permanent abolition of the state’s individual income tax. It would also have given the legislature authority to replace the revenue with higher, broader sales taxes. Here were the specifics:

1. Eliminate the individual income tax: Missouri’s current top individual rate is 4.7 percent. It would have been phased to zero out under the plan.
2. Replace the revenue with sales taxes: For a five-year period, lawmakers would have been authorized to increase the sales tax rate and expand the base to include goods and services not currently taxed. They could have done so without obtaining voter approval for each change. Sales-tax hikes imposed under that authority had to be paired with corresponding income tax reductions. These reductions would have been tied to the amount of new revenue collected by the expanded sales tax. Ultimately, the goal was to abolish the income tax entirely within that period.
3. No future income tax: Once the income tax was eliminated, the state would have been constitutionally prohibited from imposing an individual income tax in the future.

The shift from income taxes as the state’s primary source of general-fund revenue — about 64 percent — to consumption taxes would most certainly have encouraged investment within the state and spurred overall economic growth. Taxes on consumption are generally more favorable to growth than income taxes because the latter directly burden production, the engine of economic growth.

What Went Wrong?

Voters overwhelmingly rejected the amendment by 66 percentage points: 83.3 percent voted against, whereas only 16.7 percent voted in favor. The likely reason for the lopsided result was the uncertainty in the proposal.

Since the state’s income tax raises about $8.5 billion annually, that revenue would have had to be replaced with new sales tax revenue. Fine; that’s the essence of the plan. That would mean higher sales tax rates and a broader base. In addition, spending reductions would also likely be required. But the specifics of these elements were never defined.

Voters were asked to authorize eliminating the income tax without being told precisely what the replacement sales tax rate would be. Likewise, there was no clarity on exactly which currently untaxed goods and services would become taxable. Moreover, there was no discussion on what specific spending cuts might be on the table. The legislature would have worked out those details later. Opponents argued that tax cuts would deprive essential services and public education of funding.

Considering this uncertainty, voters apparently opted to stick with the devil they know rather than embrace the one they don’t.

The Postmortem

While a broad-based sales tax is a much better economic policy than income taxes, the lesson here is, as Jefferson wrote in the Declaration of Independence, “mankind are more disposed to suffer, while evils are sufferable, than to right themselves by abolishing the forms to which they are accustomed.”

Most people seem to hate the state income tax, but the idea of abolishing it without a clearly defined, measurable alternative proved unacceptable to Missouri voters. This means all future attempts at dismantling a state’s income tax system must be well-defined and “mathed-out” in a manner that people can understand, grasp, and get behind.

Short of that, policymakers must simply expect families to endure financial uncertainty. They should not be surprised when voters refuse otherwise sound changes.