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Board briefed on potential effects of Amendment 5 that would shift income tax to sales tax
Summary
The board's legislative liaison warned that Amendment 5 (an August 4 vote) would phase out income tax in favor of sales tax, potentially reducing stable general revenue that supports school foundation funding and making revenue more volatile and regressive for households.
At the board meeting the legislative liaison reviewed a proposed state constitutional amendment (referred to in the meeting as Amendment 5) that would eliminate the income tax and replace it with sales tax revenues.
The liaison said Missouri's income tax is the state's single largest revenue source, citing a figure of $8.4 billion and noting that the foundation formula included $2.5 billion in general revenue for schools in fiscal 2027. The liaison warned that shifting to sales tax could reduce steady general revenue used in foundation funding and observed that sales tax is more volatile and tends to shift burden to lower-income households.
The liaison also noted the amendment's requirement to suspend the Hancock Amendment (the voter-approval restriction on taxes) and raised geographic competitiveness concerns because Missouri borders many states and people may shop across state lines if sales tax rates increase. "So just all around, amendment 5 is not great for our schools," the liaison said.
Board members heard the briefing and were urged to vote on August 4; no formal board policy or binding action was taken at the meeting related to the amendment.
