Missouri Voters Reject Amendment 5 Income Tax Plan, Preventing Potential Sales Tax Changes on Consumer Goods

Missouri voters have rejected Amendment 5, defeating a Republican-backed plan to phase out the state income tax and let lawmakers raise sales taxes on everyday goods instead, a result that sends a warning to other states weighing the same trade.

The Associated Press called the race shortly after 8 p.m. on Tuesday, with about 84% of counted ballots against the measure.

What Amendment 5 Would Have Done

Amendment 5 would have given the Missouri General Assembly a five-year window to impose or raise sales taxes on any good or service in the state. As that revenue grew, it would have forced mandatory cuts to the income tax rate, starting at the top, until the tax hit zero.

Income taxes made up about 61% of Missouri's general revenue in the fiscal year that ended in June, raising roughly $8.5 billion (£6.3 billion) a year to fund schools, public safety, and core services. The state's top income tax rate sits at 4.7% on earnings above $9,191 (£6,831), while the base state sales tax rate is 4.225% before local charges push it higher.

Why the 'No' Vote Won

Opponents pressed one argument hard. A tax system leaning on sales taxes is regressive, meaning lower earners pay a larger share of their income than wealthy residents do.

'While the richest Missourians will pad their investment accounts, the vast majority of us will be subject to whopping increased costs for everything from home repairs to car insurance to burial services,' said Amy Blouin, president and chief executive of the Missouri Budget Project, before the vote.

Backers, led by Kehoe, had argued that killing the income tax would draw new residents and jobs, pointing to no-income-tax states such as Florida and Tennessee. The main campaign for the measure, Missouri Promise, drew a $1.9 million (£1.4 million) donation from a group that has not named its donors.

The loudest campaign against the measure came from the Missouri Association of Realtors, which funded the committee Missourians for Fair Taxation. Court records show the Western District Court of Appeals rewrote the ballot summary in June to tell voters the plan would expand the legislature's power to tax goods and services, and the Missouri Supreme Court refused to overturn that change.

What the Rejection Means in Missouri

The result means lawmakers still cannot broadly expand sales and use taxes without voter approval. Governor Mike Kehoe, who made scrapping the income tax his top priority this year, said the effort was not finished.

'While Amendment 5 did not earn the support it needed, I believe our work is far from over,' Kehoe said in a statement on Tuesday night, promising to keep pursuing tax cuts with lawmakers. Voters also rejected Amendment 4, which would have made citizen-led amendments harder to pass, while approving Amendments 1 and 2.

A Warning for Other States

The defeat lands well beyond Missouri. Had it passed, the state would have become the first to abolish its income tax since Alaska in 1980.

Kentucky, Mississippi, Oklahoma, South Carolina, and West Virginia have all set triggers to wind their income taxes down towards zero, and the wider movement has drawn support from the White House. Missouri just showed that voters will turn on a 'tax cut' once they realise it shifts the burden onto everyday spending like groceries, fuel, and car repairs.