Missourians deserve to know what will be taxed

Gov. Mike Kehoe faces an uphill battle in repealing the state income tax.

Not because it marks a retreat into a regressive tax structure. Missouri’s income tax is progressive in spirit, but the uppermost bracket has hovered around $9,000 for decades, meaning it functions almost like a flat tax.

Not because it will blow a hole in Missouri’s budget. Missouri’s general fund budget increased 64% from 2020 to 2025 and total spending surged 93% in that same time period. After getting hooked on federal stimulus funding, Missouri has a spending problem as much as a revenue problem.

The real obstacle comes when voters are asked to approve the gradual repeal of the income tax in favor of a new tax on services. This election will come 10 years after Missourians passed a statewide amendment that prohibits a government entity – a county, city or the state – from placing a tax on services.

Voters at the time ate it up, though no one really remembers because it was the same 2016 election that sent Donald Trump to the White House. In Missouri, 57% of voters supported a ban on a service tax. In Buchanan County, the support for the amendment was even higher at 61%.

The governor’s office will have to give voters a compelling reason to embrace a service tax after many of those same voters emphatically rejected the concept just 10 years ago.

Kehoe is pitching this proposal as a modernization of the tax structure that targets AI platforms, e-books and digital advertising. But it can also mean a tax on everyday services like haircuts, car repairs and Netflix subscriptions.

Generally, service taxes are applied to four categories: professional services (legal, accounting, or consulting), personal services (salon or cleaning services), digital services (streaming platforms) and property services (home repairs and installations).

But the real issue comes with carve-outs. North Carolina, a state with a service tax, has 20 pages of exemptions. Kehoe has already vowed to exempt health care, agriculture and real estate services.

It sounds like a lobbyist’s paradise, which brings up an inevitable question: Will lobbyists lobby against a tax on lobbying services?

Leave that for another day. For now, Missourians should take a “show-me state” perspective and withhold support until they know exactly what’s going to be taxed.

This “I have to vote on it to know what’s in it” stuff won’t do.