Would the proposal to eliminate Missouri’s income tax allow lawmakers to raise sales taxes?

Missouri House Joint Resolution 173 would allow lawmakers to raise sales taxes to recoup revenue lost from eliminating the income tax.

To offset the lost revenue, the resolution allows lawmakers to increase sales taxes and expand them to services, such as haircuts and digital goods, like software or music, which are currently exempt. The measure allows state lawmakers to tax any goods or services, as the funds go directly into the general revenue fund.

The current sales tax in Missouri is 3% for general revenue, with an added 1.225% for public schools, conservation and state parks. Without expanding the kind of transactions that can receive sales tax, replacing the revenue lost by eliminating income tax would require the statewide sales tax to increase to 13%.

If passed, lawmakers have three years to decide which currently untaxed goods and services would lose their exemption to compensate for the revenue loss.