Amendment 7 could eliminate all state-imposed taxes, but the timeline is unclear
COLUMBIA, Mo. (KMIZ)
Missouri voters will see Amendment 7 on the November ballot, and they'll have to decide whether to create a permanent public endowment that will grow until it reaches an amount sufficient to eliminate all state-imposed taxes.
How much the fund would need to eliminate taxes and how long it could take are not clear.
Traci Gleason from the Missouri Budget Project said the bill that put Amendment 7 on the ballot requires lawmakers to define those things if it passes.
A "yes" would establish the "Show-Me Prosperity Fund," and lawmakers would have to decide how much money to appropriate to the fund before the Missouri treasurer can invest the funds, according to the Senate Joint Resolution 95 bill summary. The funds will be invested in exchange-traded funds.
Missouri is facing a long-term $2 billion budget shortfall, according to Gov. Mike Kehoe, and the bill doesn't provide a dedicated funding source, so the appropriation would need to come from the already stretched budget.
"Any state dollars put into that fund would mean real cuts to existing services – like education, healthcare, or services for older Missourians," Gleason wrote in an email.
The fund would need to grow big enough to eliminate income tax, sales and use tax, corporate income tax and all other taxes, according to the bill. Income tax alone makes up about two-thirds of the state's general revenue.
Gleason said the state generates more than $18 billion in taxes each year, and the fund would need to generate at least $600 billion, but it could be more based on what lawmakers define as "state-imposed taxes."
"So there are a lot of unanswered questions about the fund. In any case, it would take decades – maybe generations – for it to grow large enough to eliminate state taxes," Gleason wrote.
If the fund has enough money to eliminate taxes, the treasurer will notify the General Assembly, and then the fund can be used, according to the bill. The state won't be able to impose taxes if the fund fully eliminates them, unless the program fails.
In August, Missourians turned down the Republican-backed plan to phase out the state income tax, known as Amendment 5. Critics said the amendment lacked a solid plan to eliminate and replace the revenue generated by the state income tax.
The Amendment 7 ballot language can be found on the secretary of state's website.
