Missouri residents might soon have the historic opportunity to directly eliminate their state’s income tax.
HJR 173, which recently passed the Missouri House (98-54), would allow voters to decide on a constitutional amendment phasing out income tax by 2032 and permitting expanded sales tax to fill funding gaps.
This proposed change brought mixed opinions. As voters ponder their decision, it may be helpful to see how a no-income-tax state looks in practice.
Florida: A Model Worth Emulating
Contrary to supporters’ assertions, income tax does not promote growth or prevent poverty. Extensive research indicates it disproportionately discourages saving and innovation, driving away both residents and businesses.
The nine states without income taxes economically outperform their counterparts, and Florida in particular provides a good example of all-around prosperity. U.S. News and World Report ranks it sixth among the best places to live. It consistently boasts some of the highest in-migration, and contrary to predictions made by income tax supporters, it maintains lower-than-average overall residency costs and ranks fifth on tax competitiveness.
Efficiency Over Quantity
Despite the stubborn myth that problems are fixed by taxpayer funding, taxes taken by the government are inefficiently used and even regularly go “missing.” Florida takes less and spends less, enabling taxpayers to use more of what is theirs.
One particular example is Florida’s school funding. Despite spending only $12,689 annually per student, the ninth-lowest nationally, Florida ranks 2nd on U.S. News and World Report’s list of best school systems. It has a thriving school choice voucher program that enables better education with less money.
By comparison, Missouri spends $14,241 per pupil, yet ranks only 33rd in education. One argument against reversing income tax is that it will gut school funding, leaving the budget $180 million short. Yet, if Missouri cut per-student costs to Florida’s rate, its budget would gain approximately $1.7 billion.
Suggesting budget cuts, particularly for schools, is considered almost heretical, and reports frequently refer to low-spending districts as “losers” in education. Yet, actual data show those “losers” often have superior outcomes.
Missouri residents deserve to keep their money and spend it as they see fit. Income tax is an inefficient source of public goods.
Wise Resource Use
Due to its geography, climate, and history, Florida famously offers exceptional tourism opportunities. It draws the second-most international visitors in the nation and is the fastest-growing market.
The aptly named Sunshine State might just appear geographically lucky, but its outcomes are due largely to good policy, not nature. Put simply, lower taxes lead to higher net income, which leads to lower crime and higher production, which leads to more lucrative tourism, which starts the healthy economic cycle again.
Missouri offers very different geographical and historical offerings from Florida, but it could be more attractive for tourism. Unfortunately, despite being home to some interesting destinations, it is also home to three of the country’s top 20 most dangerous places, and poverty is rampant where it should be preventable.
Marion County—the boyhood home of Mark Twain, as well as the location of a multitude of natural wonders—has a poverty rate of 13.6%. Popular Branson has a rate of 14%, and historic St. Louis comes in at a devastating 19%. St. Louis also has the highest tax burden and crime rate in the state.
Nearby St. Charles County, by contrast, sits at only a 4.7% poverty rate, despite no such inherited claims to fame. It also enjoys a low overall tax burden and crime rate.
Conditions within different cities across Missouri already illustrate the folly of trying to tax residents into prosperity. Eliminating the income tax would give the entire state a better chance of thriving.
The Bottom Line
History shows income tax elimination to be sound economic policy. Florida offers a great example, but further evidence can be found all over the map.
Individuals deserve to keep what they earn, invest in ventures they consider worthy, and make their own financial decisions. By eliminating income tax, Missouri will give basic rights back to taxpayers.