Missouri small businesses worry their sales taxes could double under plan to end income tax
By Bella Zielinski0%
5/21/2026, 2:00:00 AM
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On a side street in downtown Columbia, bakery owner Anna Meyer serves cookies, cakes, pies and breads that are free from many of the top nine most common allergens.
Meyer, herself bound by major food allergies, knows the challenge of buying affordable treats safe for her to eat.
"Our foods that we have to buy — we don't have any choice about it — are already four to eight times more expensive than regular food," Meyer said.
With the proposed elimination of the income tax in Missouri, Meyer would have to raise her prices even more.
Republican lawmakers insist increasing the state's sales tax rate would make up the billions of dollars in income taxes that the state currently collects and distributes to local governments.
Meyer already pays nearly 8.5% sales tax rate for being in Columbia's downtown business district.
If the income tax is repealed, an analysis from the left-leaning think tank Missouri Budget Project says state and local sales tax rates would need to double to plug the resulting funding hole.
"If you're talking about a $2.50 cookie going from 8% to 16%, my customers will notice that and that will make them buy less cookies," Meyer said.
"And if I can't cover my cost just to pay for my overhead, I will have to close."
Meyer isn't the only small business owner worried about these effects.
For many service-based businesses, this would be the first time they would have to collect and file sales taxes.
Daniel Moline, owner of a CPA firm in Blue Springs, said those new to the process may suffer consequences.
"People that have been in business a long time and they've never had to collect sales tax — they may just go on as they always have and now they're in violation of the law," Moline said.
"And if they were to get audited, they could owe a lot of back taxes, and it could be a major problem for them."
If business owners have to pay someone to keep track of new taxes owed, they suffer another added drain on their revenues.
Moline also pushes back on the idea that businesses would move to Missouri because of the lack of income tax.
"If anyone sees that there's no income tax, they could do five minutes of research and see the reason for that is because the sales taxes were greatly expanded," he said.
"They're going to realize that there's really no net savings because all that money has to come from somewhere."
Missouri's next door neighbor can provide direct evidence for how this may play out.
In 2012, then-Kansas governor Sam Brownback signed into law a bill cutting his state's income tax rates.
Michael Smith, author of a book on the Brownback years in Kansas, said what became known as "the Kansas experiment" did not result in the expected traffic increase to the state.
"Kansas actually had less net migration than every other state in the region, including Missouri," Smith said.
"Even though Kansas' biggest metro area, Kansas City, is shared with Missouri.
People could move without even leaving the metro area."
Smith also said the situation proves that cutting income taxes already in the single digits would not spur economic growth anyway.
"There's just not a lot of evidence that cutting that little piece of your taxes is going to provoke any economic growth," Smith said.
"Jobs are going to go to where the employer thinks they can find the workers that they want to hire.
They're not going to be based on marginal changes and state tax rates."
Back at Anna Meyer's bakery — a financial supporter of KBIA — she sees the legislature's proposal in terms of her own bottom line.
"If I decided that the thing that brings my most revenue—which are decorated cakes— I just don't want to do that anymore," Meyer said.
"They'll look at my finances and tell me no.
Why then does an entity that is in charge of our finances get to behave so poorly in a way that no other businesses are allowed to behave?"
Missouri Gov.
Mike Kehoe must decide before the end of this week if voters will see the proposal on their ballots in August or November.
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