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Missouri Tax Sructure

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February 2010

Several proposals have been introduced in the Missouri legislature to eliminate state individual and corporate income taxes, as well as St. Louis and Kansas City earnings taxes, and replace them with an expanded sales tax. The proposals would also create a new tax rebate for Missourians.

Our Position
Women's Voices Raised for Social Justice opposes the proposed change in Missouri's tax structure for several reasons:
  • The Missouri Budget Project's most recent analysis indicates that the Missouri sales tax rate would need to increase to 11 percent or more to make the plan budget neutral.
  • The rebate is estimated by the Missouri Budget Project to cost the state between $2.21 billion and $3.68 billion annually. Although the proposals are unclear about who would qualify for the rebate or its amount, it would probably not significantly alleviate a family's additional cost and would require the state to collect more money to pay for the rebate.
  • Most goods and services, whether or not they are currently taxed, would become eligible for the newly increased sales tax (only higher education tuition and fees and business-to-business transactions would be exempted from the expanded sales tax). According to the Missouri Budget Project, some items that could be subject to the new tax rate include:
    • Nursing home and in-home medical care
    • Doctor's visits
    • Child care and educational services
    • Rent, housing, and home repairs
    • Purchase of new homes
    • Utilities and telephone services
    • Health and auto insurance
    • Funerals
    • Food and prescription drugs
    • Legal counseling and financial services
    • Transportation
    • Private K-12 school tuition
    • Mental health, and disability services
    • Club dues and religious activities
    • Auto repairs
  • Young families and seniors requiring nursing home services would experience a particular burden. The Missouri Budget Project estimates that a family of two working parents and two children could pay at least $798 in additional tax just for child care, and seniors in nursing homes would pay approximately $7,000 in additional annual taxes.
  • Seniors would lose some existing tax deductions and exemptions, and they also tend to spend a larger portion of their income on expenses that would become taxed. They would spend a much greater portion of their income on taxes under the proposals.
  • Middle-income Missourians, who are likely to spend a greater share of their income on taxable products and services, would bear the greatest burden of the increase.
  • Only the wealthiest 5 percent of Missourians would not pay higher taxes under the proposals.
  • The cost of living in Missouri would increase greatly, and Missouri retailers and service providers would become less competitive than neighboring states.
  • Unlike other states without an income tax, Missouri does not obtain significant revenue from tourism or oil and coal severance fees.
  • During the last quarter of 2008, state sales tax collections declined at the greatest rate in 50 years, according to a recent study.
We urge our members to contact their state legislators and urge them to oppose these regressive tax proposals (HJR56, HJR 71, and SJR 29), or any similar proposals that may surface in the future.

Source: Missouri Budget Project paper: "Proposal to Drastically Change Missouri's Tax Structure Would Burden Missouri Families and Economy: Consequences of HJR 56, HJR71 and SJR29." Available on the web at: http://www.mobudget.org/files/Mega%20Sales%20Tax%20Fact%20Sheet%20January%202010.pdf.