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Yes on Amendment 5

Seizing the Moment to Boldly Modernize Missouri’s Economy

Why Missouri Must Modernize Its Outdated Tax Structure

Outdated 1930s design: Missouri’s tax system relies far too heavily on individual income taxes, which make up roughly two-thirds of general revenue — an unsustainable burden on working families, retirees, and growing businesses.
Rising property tax pressure: Assessments on homes, vehicles, and personal property continue to climb, squeezing homeowners even as the state struggles to remain competitive.
Economic drag: High combined income and property taxes deter investment, slow job creation, and drive talented people and businesses to faster-growing states.
Competitiveness gap: Missouri is falling behind no-income-tax states (FL, TX, TN, NV, etc.) that attract jobs, families, and investment.

How Amendment 5 Delivers Real Relief

Phases out the income tax: Gradually lowers the top individual income tax rate based on revenue growth triggers (inflation-adjusted), targeting full elimination around 2031 once the top rate falls below 1.4%.
Broadens the sales tax base: Expands sales/use taxes to more goods and services, only to replace lost income tax revenue — designed to be revenue-neutral overall.
Mandatory local tax offsets (the game-changer): Starting in 2029, local governments must annually reduce one or more of the following to return most new sales tax revenue to taxpayers:
- Local sales/use tax rates
- Personal property taxes (cars, equipment, etc.)
- Residential real property taxes (homes)
- Earnings taxes
Strong protections:
- Public schools are fully shielded — no offsets can cut education funding.
- Schools keep any additional sales tax revenue they receive.
- State sales tax rates are adjusted downward to prevent government windfalls.

Why This Is Innovative

No other state without a broad income tax has a constitutional requirement forcing local governments to specifically offset new sales tax revenue by cutting personal and residential property taxes.

Bottom Line Amendment 5 offers a voter-approved, structured transition: eliminate income taxes over time, broaden sales taxes thoughtfully, and require property tax relief at the local level — all while protecting schools and aiming for revenue neutrality. This modernizes Missouri’s economy, improves competitiveness, and puts families first.

Missourians Keep Thousands More Each Year as Individual Income Tax Ends

Eliminating the individual income tax would deliver clear annual savings to Missourians. Single filers earning $40,000 would save $1,859 per year. Savings rise to $2,356 at $50,000, $3,002 at $60,000, $3,357 at $70,000, $4,052 at $80,000, $4,756 at $90,000, and $5,921 at $100,000.

Married couples filing jointly with combined household incomes would also benefit: $1,224 per year at $40,000, $1,866 at $50,000, $2,433 at $60,000, $3,064 at $70,000, $3,742 at $80,000, $4,428 at $90,000, and $5,237 at $100,000.

The math strongly favors working families. A household earning $60,000 saves $2,433 a year when the income tax is phased out. At an estimated 6% sales tax rate on services, that same family would have to spend over $40,000 a year on newly-taxed services — like valet parking, chartered helicopter rides, skydiving, and luxury interior design — just to break even. The people spending that much on services are not working-class Missourians.

Seniors and people on fixed incomes would also gain. Missouri Promise allows for cuts to personal property taxes and residential real estate taxes — the bills that burden seniors most. Income and property taxes fall 100% on Missouri residents, while a consumption tax is also paid by tourists and out-of-state visitors who shop and use services here. The legislature retains full authority to exempt essential items like prescriptions, giving lawmakers direct tools to protect low-income households.

Small businesses stand to benefit as well. Today, many large corporations operating in Missouri pay little to no state income tax because of loopholes and special tax credits — the income tax burden falls hardest on small businesses and workers who can't afford a lobbyist. Phasing out the income tax levels the playing field and removes a direct tax on every dollar a small business owner earns.

What’s In the Bill?

Amendment 5 does not eliminate or dismantle the Hancock Amendment. The original 1980 Hancock Amendment’s core revenue caps and automatic taxpayer refunds remain fully intact and untouched. Instead, Amendment 5 provides only a narrow, temporary exemption solely from Section 18(e) of the 1996 Farmahan Amendment. This limited five-year carve-out applies exclusively to legislation directly tied to phasing out the income tax, preventing the sales tax base broadening from triggering multiple separate voter elections that would create procedural chaos and kill the reform.

The overall plan is designed to be revenue-neutral — matching income tax reductions with new sales tax revenue — while protecting local governments and schools through mandatory rate adjustments. After the five-year transition, full Hancock protections automatically return. In essence, Amendment 5 honors the spirit of Hancock by letting voters approve the broad reform once at the ballot box, enabling Missouri to modernize its outdated 1930s tax system without weakening the fundamental taxpayer safeguards.

Amendment 5 will permanently eliminate the individual Income Tax

Page 2, line 9 - 14: “Notwithstanding any provision of this constitution to the contrary, the general assembly shall enact legislation to reduce and eliminate the state individual income tax by requiring reductions to the top rate of the individual income tax based on revenue growth until such tax is eliminated. Upon the elimination of the individual income tax, the general assembly shall be prohibited from enacting or imposing any state individual income tax.

Amendment 5 Does Not Eliminate the Hancock Amendment

Amendment 5 Does Not Suspend or Eliminate the Hancock Amendment — It Only Provides a Narrow, Temporary Exemption from the Farmahan Amendment (Section 18(e)) to Enable Responsible Tax Modernization

Amendment 5 & The Hancock Amendment(Fact vs. Misinformation)

Does Not Eliminate Hancock: The original 1980 Hancock Amendment (core revenue caps and automatic refunds) remains fully in force and completely untouched.
Narrow, Temporary Exemption Only: Amendment 5 creates a limited, time-bound exemption only from Section 18(e) (the 1996 Farmahan Amendment) to allow the income tax phase-out to proceed.
Why the Exemption is Needed: Without it, the sales tax base broadening would trigger multiple separate voter elections due to the revenue threshold, killing the reform through procedural delays and uncertainty.
Strict Safeguards on the Exemption:
- Applies only to bills tied directly to eliminating the income tax.
- Limited to five years after the amendment’s effective date.
- Full Hancock protections return after the transition period.
Revenue-Neutral Design: The swap is structured as an offset — income tax cuts matched by new sales tax revenue — with local governments (including schools) held harmless through mandatory rate adjustments.
Honors Hancock’s Spirit: Allows voters to approve the big-picture reform once at the ballot box, while keeping the main taxpayer protections (revenue ceiling and refunds) strong and intact.
Responsible Modernization: Enables Missouri to escape its outdated 1930s tax system without weakening core taxpayer safeguards voters approved decades ago.

Bottom Line: Amendment 5 delivers real tax relief through a targeted, temporary carve-out — not by dismantling the Hancock Amendment.

Download Amendment 5 (HJR 173)

Protects Local Funding for Public Schools

Page 3, Line 42 - 45: “Notwithstanding the provisions of subdivision (1) of this subsection to the contrary, no political subdivision shall adjust its local tax rates in a manner that results in any reduction in funding to any public schools within, or serving, such political subdivision.”

Amendment 5 Offers a Real Opportunity to Reduce or Eliminate Property Taxes

Mandatory Local Tax Offsets: Starting in 2029, any local government receiving new revenue from the expanded sales tax base must annually reduce other taxes by a nearly equal amount to keep the overall tax burden from rising.
Direct Tools for Relief: Localities can meet the offset requirement by lowering their local sales tax rate, personal property tax levies (cars, boats, equipment), residential real property tax levies (homes), or earnings taxes.
Path to Property Tax Cuts or Elimination: Because personal and residential real property taxes are explicitly listed as offset options, localities with strong new sales tax revenue can slash — or in some cases fully eliminate — these taxes while maintaining their overall revenue levels.
Ironclad School Protections: No offsets can reduce funding for public schools. Schools are held harmless and keep any additional sales tax revenue they receive.
Revenue-Neutral Design: The mechanism prevents a net tax increase by shifting the burden from income and property taxes to consumption taxes, with state sales tax rates also adjusted downward to avoid windfalls.
Local Flexibility with Constitutional Guardrails: Outcomes depend on how much new sales tax revenue each area generates and how aggressively local officials apply the offsets, giving communities a powerful new tool for property tax relief.
Major Step Forward: Unlike current law, Amendment 5 creates a built-in constitutional “give-back” rule that opens the door for meaningful, ongoing reductions in personal property and home property taxes across Missouri.

Bottom Line: Amendment 5 doesn’t automatically eliminate property taxes statewide, but it constitutionally requires locals to return most new sales tax revenue through cuts — with property taxes as a primary target — delivering potential historic relief for homeowners and vehicle owners while fully protecting schools.

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PO Box 2                                                                                                Ballwin, MO 63022                                            www.freedomprinciplemo.org                                                              eMail: freedomprinciplemo@protonmail.com

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