Tax & Accounting Blog

States Getting Serious About Swapping Income Tax For Sales Tax

Indirect Tax, Sales and Use Tax, Transaction Tax, US Income Tax Compliance August 23, 2011

Kansas and Missouri are leading the charge to eliminate state income tax, and replacing it with a more broad-based sales tax.  Opponents say this will unfairly shift the tax burden from the wealthy onto the middle class and create an even larger revenue gap in already hurting states, while supporters believe this will provide employers incentive to hire more workers and can be expanded to cover more goods and services that were previously exempt.  Both states are approaching this issue in different ways, with Kansas making a legislative push by proposing a January phase out as part of a broader budget package, while Missouri intends to take this to the voters and has began paperwork to get this proposal on the November 2012 ballot.  Other states, such as Massachusetts in 2008, have rejected similar proposals in the past.