Republicans’ plan for zero state income tax could be ‘devastating’, experts warn

Key Points:

• Missouri is considering a constitutional amendment to eliminate state income tax, following similar Republican-led efforts in states like Kansas, Georgia, South Carolina, and West Virginia, with proponents arguing it will attract businesses and increase residents' take-home pay.
• Critics warn that eliminating income tax would disproportionately harm lower- and middle-income residents, potentially leading to increased sales taxes that would offset any benefits and reduce funding for public services such as education.
• The failed Kansas income tax cut experiment in the 2010s serves as a cautionary example, where drastic tax reductions resulted in a $900 million budget shortfall and cuts to public education, prompting the state legislature to roll back most of the cuts.
• Advocates for Missouri's amendment claim a gradual, revenue-growth-tied phase-out would avoid Kansas's mistakes, but opponents argue the measure could lead to significant sales tax increases and does not guarantee protection for state education funding.
• Economic studies suggest that cutting state income taxes has minimal impact on job creation or business formation, with most benefits flowing to high-income individuals who invest savings in the stock market rather than local economies.