HJR 174 Update: Missouri Lawmakers Are Preparing to Vote on a Major Tax Shift
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⚠️ ACTION ALERT
The Missouri House may vote next week on the House Committee Substitute for HJR 173 & HJR 174 (HCS HJR 173 & 174) before legislators leave for Spring Break. This is the current version of the proposal often referred to as HJR 174. If this passes the House, it will move to the Senate and could ultimately appear on the statewide ballot. Contact your State Representative before Monday’s session at 4 PM and ask them to slow down and fully examine this proposal.
Contact your State Representative before Monday’s session at 4 PM and ask them to slow down and fully examine this proposal.
Supporters are promoting HJR 174 as a path to eliminating Missouri’s income tax. But the vote that may happen next week is not a vote to eliminate the income tax.
Instead, it is a vote to remove constitutional protections that currently limit how the state can expand taxes.
This Is Not a Vote to Eliminate the Income Tax
HJR 174 does not repeal Missouri’s income tax.
What it does is change the Missouri Constitution so the legislature can restructure taxes later.
Whether the income tax is actually eliminated would depend on future legislation and future policy decisions.
Why This Must Be a Constitutional Amendment
Missouri voters previously placed limits in the Constitution preventing the state from expanding sales taxes to services that were not taxed as of January 1, 2015.
Those protections are the reason this proposal must be a House Joint Resolution.
A normal bill cannot override the constitutional limits voters already approved.
Ballot Language vs Reality
What voters may hear
- “Eliminate the income tax”
- “Tax reform”
- “Economic growth plan”
What the resolution actually does
- Removes constitutional protections against taxing services
- Allows the legislature to expand sales taxes later
- Creates a framework for shifting the tax burden
What This Vote Really Does
A Tax Shift, Not Necessarily a Tax Cut
Missouri currently collects roughly $9 billion per year from the individual income tax.
Once constitutional limits on taxing services are removed, the tax base could become dramatically larger than the income tax base.
Even if lawmakers eventually eliminate the income tax, the taxes collected from services and expanded sales taxes could exceed what the state currently collects.
How a Tax Shift Could Work
Supporters of HJR 174 describe it as a path to eliminating the income tax. But the resolution primarily removes constitutional limits so the legislature can restructure taxes later.
In simple terms, the shift could look something like this:
Income Taxes
↓
Potential reduction or elimination
Sales Taxes
↑
Possible expansion to maintain revenue
Service Taxes
↑
New areas could become taxable
Because services make up a very large portion of the modern economy, expanding sales taxes to services could generate far more revenue than the current income tax.
That is why removing constitutional protections against taxing services is such a significant change.
Where the Real Issue Lies: Government Spending
Missouri’s budget before COVID was about $28.8 billion.
Adjusted for inflation, that would be roughly $36 billion today.
Current budgets exceed $50 billion.
If spending simply returned to pre-COVID levels adjusted for inflation, the state could eliminate the income tax without rewriting the Constitution.
Missouri State Spending Has Grown Dramatically
One important piece of context rarely mentioned in this debate is how much Missouri state spending has increased in recent years.
Before COVID, Missouri’s total state budget was about $28.8 billion in FY2019. Adjusted for inflation, that would be roughly $36 billion today.
Recent state budgets exceed $50 billion.
That means Missouri state spending has grown by roughly $14 billion above inflation-adjusted levels in just a few years.
Missouri State Budget Growth
Illustration based on Missouri state budget totals.
Returning spending to pre-COVID levels (adjusted for inflation) would reduce the state’s revenue needs by an amount comparable to the revenue currently collected through the individual income tax.
That raises an important question:
If the goal is truly eliminating the income tax, why not address spending first instead of rewriting the Constitution?
What Could Be Taxed If Constitutional Protections Are Removed?
Under current constitutional protections, many services cannot be taxed. Removing those protections could allow taxes on areas such as:
- Auto repair
- Home repairs
- Legal services
- Accounting services
- Haircuts and salons
- childcare services
- digital services
- professional consulting
These examples illustrate the potential scope once constitutional restrictions are removed.
What Happened in the Commerce Committee
The committee advanced a substitute combining HJR 173 and HJR 174.
Several concerning procedural issues occurred:
- The substitute was given to committee members less than 24 hours before the hearing.
- An amendment proposing clearer ballot language was rejected.
- Very little discussion occurred before the vote.
- No public testimony was allowed on the new substitute.
The measure passed the committee on a 7-3 vote.
A Surprising Moment in the Hearing
During the committee hearing, it was largely Democratic members who were asking for clearer ballot language and more transparency.
While their policy goals may differ from ours, it was notable that they were the members pressing for more time to examine the proposal and for voters to receive accurate information about what the amendment would actually do.
Watch the Commerce Committee Hearing
Commerce Committee Hearing on HJR 174
Watch the House Commerce Committee discussion on HJR 174. The substitute language was presented to members less than 24 hours before the vote, and an amendment proposing more accurate ballot language was rejected.
Read the Source Documents
How Citizens Can Contact Their Representative
When contacting your representative, it is far more effective to write in your own words.
Here are some questions or concerns you may wish to raise:
- Why change the Constitution instead of reducing spending first?
- Why remove voter protections against taxing services?
- Why was the committee substitute rushed through with so little review?
- Should voters receive clearer ballot language explaining the full effects?
- Why not allow public testimony on the new substitute?
Even a short personal message explaining your concerns can make a difference.
Share This With Others
The House could vote on this proposal very soon.
If you believe Missourians deserve to understand what they are being asked to approve, please share this article with friends, family, coworkers, and anyone who cares about the future of our state.