Jason Hancock
| Missouri Independent
A lawsuit filed Wednesday, May 13 seeks to knock a proposed constitutional amendment off Missouri’s 2026 ballot that would give lawmakers new power to expand sales taxes to eliminate the income tax, arguing legislators bundled too many subjects into one proposal and wrote misleading ballot language.
The lawsuit, filed in Cole County Circuit Court by attorney Chuck Hatfield on behalf of a Missouri resident, challenges a proposed ballot question that would ask voters to amend the Missouri Constitution to begin phasing out the state individual income tax.
The measure, approved by the legislature last month, is expected to appear on the November ballot unless Gov. Mike Kehoe moves it to another election. Kehoe has made eliminating the income tax one of his top priorities, arguing it would make Missouri more competitive with states that do not tax individual income.
But the lawsuit argues the proposal is constitutionally defective and should be blocked from any ballot. In the alternative, it asks the court to rewrite the summary statement voters would see.
The lawsuits central legal argument is that the proposal violates constitutional limits on ballot measures by including more than one subject and effectively amending multiple articles of the Missouri Constitution.
“This is precisely the logrolling harm the multi-article rule was designed to prevent,” the lawsuit argues, contending voters who support eliminating the income tax could be forced to also accept provisions they oppose, such as expanding the sales tax or changing how road funds and local taxes are handled.
The lawsuit also argues the proposal would improperly expand the constitutional role of the state auditor by requiring the office to calculate reduced tax rates triggered by the amendment. The petition contends that duty is not related to auditing the receipt or expenditure of public funds, which the Missouri Constitution says is the limit of the auditor’s authority.
Instead, the lawsuit argues, the amendment would give the auditor a new rate-setting or revenue-modeling role, including authority to calculate changes affecting tax rates set elsewhere in the constitution.
A spokesperson for Secretary of State Denny Hoskins, who was among the named respondents in the lawsuit, did not respond to a request for comment.
If passed, the proposal would direct lawmakers to set a revenue baseline and triggers for phased-in reductions in the top tax rate. It also allows five years for the legislature to write a new sales tax law, which must be directly tied to cuts in the top income tax rate in a manner supporters hope will not increase or decrease revenue.
Currently Missouri has an income tax with a top rate of 4.7% for taxable incomes greater than about $9,200 a year. The sales tax is 3% for general revenue, but earmarked state taxes and local options stack on top of that, creating a rate that is 7% to 8% in most locations and can be as much as 12% in some special districts.
The sales tax applies to physical goods and excludes services. The Missouri Constitution prohibits lawmakers from applying the sales tax to real estate transfers and any goods or services not currently taxed, but those provisions would not apply to any sales tax plan passed as a result of the constitutional amendment.
Missouri gets about 65% of its state revenue from income tax, about 22% from sales tax and the rest from other sources including a corporate income tax. To replace the revenue from the income tax without expanding coverage of the sales tax would increase the tax rate by as much as 8.5%.
State law exempts residential utility costs, prescription drugs and groceries from all or a portion of the current sales tax. There are also dozens of other sales tax exemptions, mainly tied to business operations as an economic development tool.
The lawsuit also challenges the ballot summary approved by lawmakers.
The summary asks voters whether the Missouri Constitution should be amended to “phase-out the individual income tax based on revenue growth,” “reduce personal property and other local taxes when local revenues increase,” “modify the sales and use tax to eliminate income tax and reduce local taxes” and “protect local funding for public schools and other purposes.”
The lawsuit argues that language is unfair and insufficient because it does not tell voters that the amendment would allow lawmakers to tax services now protected from sales taxes, would temporarily exempt certain tax increases from constitutional limits on new annual revenue and would permanently bar lawmakers from reimposing an individual income tax once it is eliminated.
The lawsuit takes particular aim at the word “modify,” arguing it fails to convey the breadth of the sales-tax authority voters would be granting lawmakers.
“A voter reading ‘modify the sales and use tax’ would not be apprised that the resolution authorizes the state to begin taxing services such as haircuts, legal fees, home repairs, medical services, accounting, and any other service currently exempt from sales tax,” the lawsuit states.
It also argues the phrase “protect local funding for public schools and other purposes” is argumentative because the word “protect” encourages support for the measure rather than neutrally describing what it does.
“If the people are allowed to have a fair vote, they’ll vote this amendment down,” Hatfield said in an interview May 13. “But the ballot summary the legislature wants to show them is just not fair or accurate.”
The governor called on lawmakers in January to place an income-tax phaseout on the ballot, saying voter approval would allow lawmakers to act next session.
Supporters of the amendment have argued that eliminating the income tax would help Missouri attract residents, jobs and investment. During debate over the proposal, Republicans framed it as a long-term economic growth strategy and a way to let Missourians keep more of what they earn.
Opponents have argued the plan would shift the tax burden toward sales taxes, raising costs for people who spend a larger share of their income on taxable goods and services. They have also warned that the ballot language does not make clear that voters would be authorizing a broader sales tax in order to replace revenue from the income tax.
The lawsuit asks the court to permanently block Hoskins from placing the measure on any ballot. If the court declines to do that, it asks for a new summary statement that “fairly and accurately conveys the central purpose and probable effects” of the amendment.
This story was first published at missouriindependent.com.
