One of Governor Mike Kehoe’s top priorities this legislative session, scrapping the state income tax, is getting traction in the Missouri House this week.
HJR 173 and HJR 174, two identical resolutions, were heard together on Wednesday by the Missouri House Committee on Commerce.
They would both gradually phase out the individual income tax by Jan. 1st, 2031.
Several people testified in favor of the proposal, including Will Spartin, co-founder of a cannabis beverage company based in Miami, Florida. Spartin is a Missouri native and Washington University graduate, and told the committee that he’d “love” to move back home.
“Our decision to base our headquarters in Florida was not accidental,” Spartin testified. “Florida has no state income tax, Missouri does. That difference matters.”
Dennis Ganahl, founder and board chairman of Mo Tax Relief Now, also testified in favor.
“Our goal is to build Missouri,” he said. “We’ve made Missouri a great place to retire. Now we want to make it a great place for families to grow and businesses to come in.”
Ganahl was referencing past bills that are now state law. They include a 2024 bill that ended income taxes being levied on capital gains, a 2023 bill that ended taxing of Social Security income, and a freeze on property tax rates that seniors age 62 and older can apply for annually.
Opponents testified that phasing out the state income tax would force the state and local governments to make drastic cuts to services, as well as causing a massive hike in sales taxes imposed everything from oil changes to pet care. If it passes the legislature, the proposed tax phase out would then be decided by Missouri voters, possibly this fall.
Other supporters have said phasing out it will lessen the tax burden on Missouri residents and encourage people and businesses in other states to move here.
But several opponents also showed up to Wednesday’s public hearing, including Jay Hardenbrook, Director of Advocacy for AARP Missouri. He testified that scrapping the state income tax would cause a huge tax shift onto older Missourians with fixed incomes.
“If you rely on a public pension or Social Security for the majority of your income, you are going to see a massive, massive tax increase and it’s going to be in everyday costs,” Hardenbrook said. “So, all those things that we’re worried about with inflation, our older members are going to see those costs increase again.”
John Coffman, a lobbyist for the Consumers Council of Missouri, also testified in opposition. He expressed concern that new sales taxes would be created as utility costs are rising.
“And among that affordability, usually you talk about grocery prices, maybe housing costs, and utilities,” Coffman said. “Utilities (are) driving the overall unaffordability. It’s definitely higher than the overall inflation rate, so it is driving the inflation rate. It is higher than wage growth.”
The House Commerce Committee has not yet voted on HJR 173 or HJR 174. They are sponsored respectively by State Rep. Bishop Davidson, R-Republic, and House Speaker Jonathan Patterson, R-Lee’s Summit.
The proposal needs to pass both the Missouri House and Senate before being placed on the ballot for Missouri voters to decide.
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