Missouri Secretary of State clears new income tax replacement initiative text

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October 13, 2011

By Bailey Ludlam


SPRINGFIELD, Missouri: This week, the Missouri Secretary of State cleared two new versions of an income tax replacement initiative. Initially filed in February 2011, supporters aim to qualify the initiative for the Missouri 2012 ballot.

A grand total of 13 versions have been filed.

The measure would phase out income taxes while levying a state sales tax on more purchases. According to reports, the sales tax would be capped at 7 percent and would include goods and services.

The recently cleared ballot language reads:[1]

Shall the Missouri Constitution be amended to:
  • eliminate taxes paid by individuals based on income or earnings and sales and use taxes, including taxes paid by corporations and individuals, with certain exceptions;
  • require the legislature to impose an expanded state sales tax on all sales and services, and allow the legislature to increase taxes up to 5½% on purchases of food and 7% on other sales and services, with certain exceptions;
  • require that state and local cumulative sales tax rate not exceed 10%, with certain exceptions; and
  • provide for a real property tax credit for eligible homeowners?

Annual state government revenue under this proposal may increase by up to $300 million, or decrease by up to $1.5 billion. The proposal is estimated to increase state operating costs by at least $12.9 million, and may accelerate tax credit redemptions. The fiscal impact to local governments is unknown.

The text has come under scrutiny more than once with the most recent lawsuit filed in September 2011. Missourians for Fair Taxation filed a lawsuit in an effort to change the ballot language. According to the group, the language was vague. The text says that the measure may earn the state $300 million or cost it $1.5 billion. According to reports, "Republican [Auditor] Tom Schweich says that there are too many variables involved for his office to roll-up its sleeves and crunch the numbers."[2]

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