Missouri House committee hears income-tax elimination bill Wednesday
Alison Patton
JEFFERSON CITY, Mo. (KMIZ)
A committee in the Missouri state House of Representatives heard the governor’s income-tax elimination bill and public comment on Wednesday.
Income-tax revenue makes up about two-thirds of the state’s revenue. The general assembly needs to find a way to replace money from the income tax, and Republican Gov. Mike Kehoe proposed expanding the sales tax to include services.
The policy is receiving a lot of attention from Republicans, including Speaker of the House Jonathon Patterson (R-Lees Summit), who introduced the bill to the commerce committee.
Many Republicans who support eliminating the income tax say it means more money in Missourians’ pockets, which is true. Missourians and people who come to the state could pay more at the register.
“I don’t think it’s a wash because it gives you your money, you hard-earned money, and lets you keep it, and then it lets you have a choice on how to spend it,” Patterson said.
Patterson and representatives from tourist attracting areas like the Lake of the Ozarks argue that eliminating the income tax makes Missouri more competitive.
However, Democrats argue this would increase the prices of everyday services, especially for senior citizens.
Rep. Pattie Mansur (D-Kansas City) said older adults on Social Security don’t pay income tax, and she’s worried this bill would add expenses that a fixed income can’t afford.
“By eliminating income tax for the state, then we have no choice but to raise sales tax, and we don’t know what that’s going to look like with the bill, that’s not described yet,” Mansur said.
The governor said he was trying not to increase the sales tax rate.
Patterson said the way to combat the sales tax base increase is for local governments to reduce property and personal taxes. The bill language requires this to be done by July 2029, if passed.
The speaker said his bill won’t disrupt public schools, which rely on state funding and local property taxes.
Jason Zamkus, a lobbyist with the Missouri Realtors, testified Wednesday morning in opposition to the bill. He said the bill could force price hikes on services like home inspections, appraisals and title insurance.
“After you layer all those together, it could inflate the housing costs to a Missourian, and potentially price them out of the market,” he said.
The speaker’s bill, House Joint Resolution 174, doesn’t make any changes to the tax rate right away. If passed, the bill would ask voters on November’s ballot if they would want to get rid of income tax, Patterson said. From there, the next general assembly would make a plan to eliminate the income tax.
Committee Chairman Rep. David Casteel (R-High Ridge) said the committee is likely to vote on the bill next week.
Kehoe said in his State of the State Address that income tax elimination is a top priority for this legislative session.