Democrats file alternate tax plan to Kehoe’s proposed income tax elimination
Alison Patton
COLUMBIA, Mo. (KMIZ)
Missouri Speaker of the House Jonathon Patterson (R-Lees Summit) has introduced the framework of the governor’s tax elimination plan, and Representative Mark Boyko (D-Kirkwood) from across the aisle filed an alternate plan.
Governor Mike Kehoe has been a long-standing proponent of eliminating the state’s income tax. The bill Patterson filed would do that without increasing the sales tax rate, but it would expand the sales tax base to include services.
“For the purpose of reducing and eliminating the state individual income tax, state and local sales and use taxes or any similar transaction-based tax may be expanded by legislation to impose taxes on transactions involving any goods and services,” the House Joint Resolution 165 reads.
During his State of the State Address on Tuesday, Kehoe said this might mean local governments will have to adjust their property tax rates to compensate for the sales tax expansion.
Cole County Commissioner Harry Otto told ABC 17 News that county sales, property and use taxes were the biggest revenue streams for the county.
On Wednesday, Otto said adjusting the tax base while also adjusting property taxes isn’t what’s best for the budget.
“What sounds good for the county is an expansion of the sales tax base,” Otto said. “What doesn’t sound good for the county is some kind of contraction on the property tax.”
Patterson’s tax plan, if passed, would either need to be put before the voters in November or be passed during a special election.
Voters would only need to give an OK for lawmakers to adjust their taxes because of the Hancock amendment, which requires tax rate adjustments to be passed by the voters, Otto said.
The bill text says “any tax or revenue increase resulting from legislation enacted for the purpose of reducing and eliminating state individual income tax” is exempt from the Hancock Amendment.
An official, detailed income tax elimination plan hasn’t been announced.
On the opening day of the regular session, Democrats announced that they would file alternative legislation, and they did.
Boyko filed House Bill 2975, which would adjust Missouri’s tax brackets.
Currently, anyone with a taxable income in Missouri who makes over $9,191 is pays a base rate of $256 plus 6% on income over the base income. For example, if a person makes $10,000, they would be taxed 6% on $809.
Starting in 2027, Boyko wants to adjust taxes for people who make over $30,000 and increase taxes for people who make over $1 million.
According to Boyko’s plan, people who make over $30,000 would be pay a base tax of $1,183.25 plus 4.7% on excess–the current rate. The highest earners would pay a base of $46,773 plus 5.9% on excess over $1 million.
People who make less than $30,000 would receive a tax break:
Earners between $7,500 and $30,000 have a base pay of $159 and excess tax rate of 4.55%.
Earners between $2,000 and $7,500 don’t have a base pay but are taxed 2.9%.
Earners that make less than $2,000 aren’t taxed.
Missouri currently has a tiered tax system. If the state hits a certain amount of revenue each fiscal year, then it triggers a new tax rate.
The state has already hit a few of the triggers since 2023, which can be found in the income tax law. Boyko’s proposed plan would take out that tiered system.
Both proposed bills need to be placed with a committee, and it’s up to Patterson to do that.
“If the speaker (Speaker of the House Jon Patterson) gives my plan the same shot the Speaker will give his own plan, in terms of assigning it to a committee, I look forward to having a debate and explaining to my colleagues that this is the plan that would actually lower taxes and reduce costs on Missourians,” Boyko said.
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