Sponsor outlines plan to eliminate state income tax; committee hears wide-ranging support and caution

Representative Bishop Davidson, sponsor of House Joint Resolution 1 (HJR1) and its companion House Bill 100, walked the committee through an ambitious tax‑reform package meant to eliminate Missouri’s personal income and capital‑gains taxes over time and to replace that revenue base by broadening consumption taxes and instituting spending restraints.

Davidson described three complementary mechanisms for tax elimination: capturing growth (a spending cap to hold spending below revenue growth), programmatic efficiency, and replacement revenues. In Davidson’s proposed committee substitute, the state would immediately eliminate the individual income tax and personal capital gains tax in the constitution, create a tax reform fund to capture growth, and use that fund to phase down a broadened state sales‑tax rate until it reached a constitutional cap of 4%. Once that cap was reached the framework would next phase down corporate income taxes using the same reserve mechanic. Davidson also described a budget stabilization fund and a “strategic gold and silver reserve” intended to hold a portion of excess balances in physical assets rather than large cash balances.

Representative Davidson said the proposal aims to be revenue‑neutral over time, to “chisel away” at the income tax using growth and a statutory sales‑tax rate, and to provide an override process for emergencies: the legislature could temporarily raise the cap with two‑thirds (or suspend it with three‑quarters) votes under specified conditions.

The hearing included broad public testimony. Supporters included Dennis Ganahl (Mo Tax Relief Now), Camelia Peterson (Americans for Prosperity), Marco Zolato Rodas (Missouri Tax Relief Now), Aaron Hedlund (economist, former White House CEA economist), and others. They praised the approach as pro‑growth, said a broad consumption tax is less distortionary than an income tax and urged action to regain competitiveness with no‑income‑tax states.

Opponents and cautious witnesses were mostly from business, municipal and tax‑practice perspectives. Sam Lecliter of Missouri Realtors opposed removing the constitutional prohibition on taxing services (section 26), calling the measure a tax “switch” rather than a cut. Chuck Pierce of the Missouri Society of CPAs warned that taxing services changes the base in ways that could double‑tax inputs and complicate remote‑seller collection rules developed since Wayfair. Paul Payne and city municipal representatives earlier raised concerns that the regional and local fiscal impacts need further study.

Committee members pressed the sponsor on the modeling and triggers. Davidson and allied experts said they had run expenditure and consumption calculations and that the package relied on conservative estimates and the tax reform fund to hold balances that would buy down statutory rates over time. Several members cautioned that Missouri’s Hancock amendment and the difficulty of raising revenue later increases the need for rigorous modeling before a ballot measure.

Ending

Davidson said he will continue detailed modeling and stakeholder outreach, and he asked the committee for time to refine statutory language in HB100 to match the committee substitute under consideration. Committee members expressed interest in follow‑up briefings on the revenue modeling and emergency override language before any constitutional referral or statutory implementation.