Missouri commerce committee hears hours of testimony on ballot plan to phase out income tax, expand sales tax base

The Commerce Committee opened a public hearing on two joint resolutions, HJR 174 and HJR 173, that would send to voters a plan to phase out Missouri’s individual income tax and authorize the General Assembly to broaden the state sales and use tax base to replace that revenue.

Sponsor Representative John Patterson, who introduced HJR 174, framed the proposal as a first, voter‑driven step to "modernize our tax system." He told the committee, "This is the first step in a long, methodical process" and said specific triggers and exemptions would be designed later by the legislature if voters approve the change.

Committee members pressed Patterson on several fronts. Representative Seitz said the public deserves clarity on the "revenue triggers" that would permit income tax reductions and whether raising sales taxes on goods and services would simply offset any income tax savings. Patterson replied the next General Assembly would set specific triggers and exemptions. Representative Kimball referenced Kansas and asked whether steep revenue declines were possible; Patterson said the HJR includes guardrails and that Missouri has used triggers since 2017.

Many lawmakers raised distributional concerns for seniors and low‑income households who might pay little or no state income tax today but would face higher sales taxes if the base is expanded. Representative Manser said constituents "are not getting the full menu of services" now and asked how the HJR would protect vulnerable people; Patterson pointed to provisions that would require cities and counties receiving additional sales revenue to use some of it to reduce property or personal‑property levies.

In the public comment portion, experts and advocates split sharply. Jeremy Lafavor of the Missouri Budget Project testified in opposition, citing modeling that—based on his group's assumptions—suggests the changes "would raise taxes on 80% of Missourians" and could produce a multi‑billion‑dollar shortfall depending on exemptions and legislative choices. Lafavor urged caution, arguing expanded sales taxation would be regressive and cut state budgets for services.

Economists and business witnesses testified in support. Aaron Hedlund, introduced as a resident of Columbia and the chief economist at the White House Council of Economic Advisors, told the committee the "economics point to the excessive damage from income taxes," arguing lower income rates can attract residents and investment. Business owners and taxpayer groups said modernizing the base would better align Missouri’s tax code with a services‑driven economy and help retain younger workers.

Industry groups, local governments and nonprofits raised practical concerns: the Missouri Association of Realtors and other witnesses pressed for explicit exemptions for real estate and related services; AARP expressed strong opposition citing risks to seniors on fixed incomes; county and city representatives warned about local revenue control and coordination with ongoing school‑finance and property‑tax work.

No formal motion or committee vote was taken during the hearing; sponsors and many witnesses described the measure as step one in a multi‑stage process that, if voters approve, would require follow‑up legislation to define which services are taxed and how replacement revenue is allocated. The committee recessed at the end of the scheduled testimony and indicated it will reconvene to continue consideration.

What’s next: If the General Assembly approves a joint resolution placing an amendment before voters, the detailed design of triggers, exemptions and any offsetting changes would be left to future legislative action or implementing statutes. Committee members repeatedly requested modeling, fiscal analyses and explicit proposals for exemptions before the issue moves further.

Sources: Committee hearing testimony and questions; witness filings and public comments presented to the Commerce Committee.