MARIES COUNTY — Missourians will soon decide whether to phase out the state income tax during the Aug. 4 primary election.

Amendment 5, if passed, will require the legislature to phase out the state income tax and prohibit its reinstatement. Supporters believe that this ballot measure makes taxes fairer and allows Missourians to keep more of their paychecks, but others are concerned about increased sales taxes affecting younger families.

Current sales taxes generally apply to tangible personal property and specific services such as utilities, entertainment and athletic events, and hotels, but the ballot measure allows the legislature to tax “any goods and services.”

As sales tax revenue increases, the legislature would have to cut the highest income tax rate to account for the increased revenue until the state income tax is eliminated.

The ballot measure also suspends for five years some of the limitations of the Hancock Amendment of the Missouri Constitution, preventing taxes that increase revenue beyond certain thresholds without voter approval.

Furthermore, as the legislature expands sales and use taxes, local governments must complete a one-time rate cut by 97 percent of the increased revenue after one year. Cuts can come from sales and use tax rates, levies imposed on properties in second-class and some first-class counties, and local income taxes. However, these cuts can’t reduce public school funding.

After one year of such bills, the state auditor must also cut the sales tax rates imposed directly by the Constitution by the amount of additional revenue. This includes the 0.1 percent tax for soil and water conservation and the 0.125 percent tax for conservation purposes. Marijuana sales taxes are exempt from this tax cut.

During an interview with KMOV St. Louis reporter Lauren Trager, Gov. Mike Kehoe said that the average Missourian will benefit from Amendment 5 with the average family keeping $2,000 per year.

Kehoe said that he is committed to not increasing taxes on agriculture, health care or real estate — including rent and prescriptions. As for groceries, Kehoe said that there is no state sales tax on groceries. However, Missouri currently collects a 1.225 percent on food sales, instead of the normal 4.225 percent.

He believes that ballot measure is designed to update the tax code to better align with nearby states and to reflect industry changes over the past 100 years, such as ecommerce. As an example, he said that people used to buy records at a store called Peaches, but now music is digitally downloaded and not taxable.

As for services like haircuts, painting or plumbing, Kehoe said that it is good to debate these issues in the legislature.

“And I believe that will happen in a very open and transparent process,” he said.

Kehoe also believes that Amendment 5 will grow the economy, make Missouri more competitive with other states and said that other businesses will move to the state if the amendment passes. But he declined to name specific businesses.

“I think there’s not a conversation I’ve had with a CEO or a family-owned business, who either is already located here or considering moving here, telling me they love the tax policy,” he said. “Literally, that’s almost 100 percent.”

For Vic Stratman, Maries County presiding commissioner, he is concerned that the ballot measure is “short sighted” and that Missouri doesn’t have the level of tourism as states with no income tax like Florida or Tennessee.

“Tourism has got to be 10 times their impact as it is here, and so if we go to Florida, we’re paying their income tax,” he said.

To phase out the income tax, Stratman believes that removing the state income tax will affect younger families with dependent children and lower incomes because they pay less — if anything — in income taxes. But when sales taxes are raised, everyone pays more on those goods and services.

“The state is complaining they don’t have any money now. If they do that, that money is going to have to come from someplace. It’s not like it can be cut,” he said.

As an example, Stratman mentioned his granddaughter who was about to be married. He said that she and her then fiancé probably both have college debt and a mortgage and will have to purchase a car. He said that paying higher sales taxes will be a burden for them.

Nicolas Ziebarth, economics professor at University of Missouri, believes that there are a lot of uncertainties about Amendment 5’s economic effects because the replacement with sales taxes is “a little bit up in the air.”

He said that how sales taxes affect low-income families depends on how they are applied. For example, a sales tax increase that exempts food purchases will probably be more “regressive” than the current tax system that taxes higher income brackets at a higher rate. But a flat sales tax across the board would have a higher impact on low-income families.

Ziebarth doesn’t think that the legislature will institute a flat sales tax increase across the board; he believes that there will be exemptions or lower rates for certain goods and services.

“How that all shakes out is going to go a long way to deciding who exactly bears the cost of this,” he said.

However, Ziebarth does think that Amendment 5 would cause economic growth because a sales tax is better than an income tax because it encourages work and saving. But he said that how much better is the “million-dollar question,” partly determined by what replaces the income tax.

“I don’t know the answer to that. I don’t think any economist knows the answer to that,” he said.

If Amendment 5 passes, Ziebarth believes that the best-case scenario is that sales tax revenue completely replaces revenue from the income tax without it being too regressive or too many exemptions from lobbyists. Then the economy will grow and people will move to Missouri.

In the worst-case scenario, Ziebarth believes that sales tax revenue would not make up for most or all of the lost income tax revenue. To keep the budget balanced, the state would have to cut expenditures, such as on roads, schools and healthcare. And then the economy would function as it had previously.

“I don’t see a world where getting rid of the state income tax and replacing it with a consumption tax is a net negative for the economy,” he said. “But I wouldn’t be surprised if there’s not a huge positive effect either.”

However, Ziebarth isn’t sure about the most realistic outcome, believing that is more within the realm of politics. He speculates that the state will replace much, but not all, of the lost revenue, and there will be many “weird” exemptions that don’t make sense with economic principles.

As for comparisons with other states, Ziebarth said that if states have a growing or strong economy, it makes it easier for those like Nevada, Tennessee or Florida to eliminate or operate without a state income tax.

He said Missouri is in a weaker spot than states without an income tax. He also said some may push for eliminating the state income tax to boost the economy while those opposed may want to be more conservative.

While tourism may be higher in these other states, Ziebarth is not sure how much of a factor it is in the overall economy.

For Rep. Bruce Sassmann, R-Bland, while he voted to place Amendment 5 on the ballot, he declined to share his personal view. He said his vote in the state House was for the democratic process and that the legislature’s intent was not to hurt low-income families.

“I wanted to give the voters a chance to decide,” he said.