Do you prefer to pay income taxes or sales taxes? Missouri voters will get to choose

It’s not every day—or even every decade—that voters are presented a decision like this: Should the state's individual income tax be eliminated? When that question appears on a Missouri ballot later this year, it will mark the first time since the modern income tax began over a century ago that a U.S. state legislature has asked voters whether to eliminate the tax. If they say "yes," they will also be authorizing a sales tax expansion. Missouri's unique proposal caps a five-year tax-cutting binge in states that flourished while governments were flush with cash during the recovery from the COVID-19 pandemic and only recently abated as some Democratic-led states embraced higher tax rates on millionaires. During that time, almost every state made either permanent or temporary reductions to some type of tax, whether on income, sales, property, or gas. And more than half the states that levy income taxes reduced their top tax rate. Those tax cuts were seldom offset by increasing other types of taxes. But Missouri's new measure implicitly acknowledges that it's hard to eliminate an income tax without raising other revenues to keep government running. Congress gained the power to tax income with the ratification of the 16th Amendment in 1913. Many states adopted their own income taxes over the ensuing years, including Missouri in 1917. But some states—Florida, Nevada, South Dakota, Texas, and Wyoming—never adopted an individual income tax, instead relying on sales taxes, oil taxes, or other sources. New Hampshire and Tennessee, which taxed income from interest and dividends but not wages, each ended those taxes within the past five years. Missouri's proposed constitutional amendment directs the General Assembly to eliminate the individual income tax through gradual reductions based on revenue growth. To spur that along, it gives lawmakers the authority to raise revenues by imposing the sales tax on "any goods and services"—sidestepping a constitutional ban on expanding the sales tax base that voters approved in 2016. The legislature would have five years to decide which additional sales to tax without needing another vote of the people. This article was provided by The Associated Press.