Missouri's Amendment 5 is being argued about almost entirely in terms of one question: would it put a sales tax on health care? That question is real, and it is unresolved. But the more useful way to understand the measure is to look at what it legally does, because the framing and the mechanism point in different directions.
What the amendment actually does
Amendment 5 would amend the Missouri constitution to give lawmakers broad authority to expand the state sales tax and use the revenue to eliminate the income tax.
The stakes are large. Missouri's income tax generates about 65% of the state's annual general revenue, roughly $8.7 billion in 2026. Replacing two-thirds of general revenue is not a marginal adjustment.
The mechanism is a revenue trigger rather than an immediate repeal. Under the amendment, for each additional $20 million in revenue over a fiscal year 2025 base, the top income tax rate would be cut by 0.01 percentage points, capped at a 1.6 percentage point reduction in any single year, with the tax eliminated when reductions bring the top rate to 1.4%. To hit the maximum single-year cut, revenue would need to grow by $3.2 billion.
Critically, the amendment gives lawmakers three years to expand the sales tax to "all goods and services" and eliminate exemptions, without having to seek another statewide vote.
For context, Missouri's current state sales tax is 3% for general revenue plus 1.225% earmarked for schools, conservation, parks, and soil conservation. The personal income tax is nearly flat: the top rate of 4.7% applies to taxable income above $9,436.
The argument that reframes the debate
The most analytically pointed objection comes from AARP Missouri's advocacy director, Jay Hardenbrook, who argues that raising taxes on health care, real estate, and agriculture is the real purpose of the amendment, because the legislature does not need special permission to cut income taxes.
That is an advocate's framing, but the underlying logic is worth examining on its own terms. The Missouri legislature has already cut income taxes repeatedly through ordinary legislation, including a series of cuts since 2022 and the repeal of capital gains taxes. No constitutional amendment was required for any of that.
What ordinary legislation apparently cannot easily accomplish is broadly expanding the sales tax base into currently exempt categories. So the operative legal content of Amendment 5, the thing it uniquely enables, is the taxing authority rather than the tax cut. Whether that is a fair characterization of the sponsors' intent is contested, and supporters would say the two are inseparable because you cannot eliminate the income tax without a replacement. But voters evaluating the measure should understand that the durable, hard-to-reverse grant is the expanded base authority, written into the constitution, while the income tax reduction is conditional on revenue growth that may or may not materialize.
The case for it
The proponents' argument deserves a fair statement, and it rests on mainstream economic reasoning.
State Rep. Bishop Davidson, who presented the plan, called the income tax the least fair tax, one that undermines economic growth, arguing that taxing income means taxing productivity and creativity. That reflects a well-established position in public finance: consumption taxes are generally considered less distortionary than income taxes because they do not penalize working, saving, or investing at the margin. States without income taxes frequently cite competitive advantages in attracting residents and businesses.
Supporters would also note the trigger design is conservative by construction. Income tax rates fall only as replacement revenue actually arrives, in increments tied to measured growth, rather than through an immediate repeal that blows a hole in the budget. And Gov. Mike Kehoe has stated he will never support extending sales taxes on agriculture, health care, or real estate.
Broadening a sales tax base to include services also has a legitimate policy rationale independent of rate cuts. Most state sales taxes were designed for a goods-based economy and now exempt the services that make up the majority of consumer spending, which narrows the base and forces higher rates on the goods that remain.
The case against it
The opposing case rests on arithmetic and on distribution.
On arithmetic: replacing $8.7 billion is difficult without reaching large exempt categories, which is why critics say it would be hard to make up the lost revenue without also imposing taxes on health care. Health care is among the largest categories of consumer spending, so a base expansion that excludes it has a much harder time reaching the target. The governor's pledge, while clear, comes with an important qualifier he himself acknowledged: the legislature would have to decide what to exempt if the measure passes. A governor's commitment does not bind future legislatures, and the amendment places the authority with the legislature.
On distribution: Missouri's income tax is nearly flat already, with the top rate applying above roughly $9,400 of taxable income. Sales taxes are generally regressive, consuming a larger share of income for lower-income households, who spend more of what they earn. Swapping a nearly-flat income tax for a broader sales tax would shift the burden down the income scale, which is a real trade-off regardless of one's view of the growth effects.
The budget backdrop sharpens both concerns. Gov. Kehoe restricted about $440 million in spending this year over lagging revenues, the state auditor has warned the pandemic-era surplus is dwindling, and Missouri is projected to lose about $14 billion in federal Medicaid funding over ten years under the 2025 federal tax law. Restructuring two-thirds of general revenue while absorbing a large federal health funding loss is a compounding risk.
The health care wrinkle almost nobody explains
There is a technical point specific to taxing health care that materially changes who would pay, and it deserves more attention than it gets.
Federal law already prohibits states from imposing taxes on many health care services covered by government programs such as Medicare and Medicaid, and more than a third of Americans were insured through those two programs in 2024.
Follow that through. If a large share of health care spending is federally shielded, a state health care sales tax cannot fall on it. The tax would land instead on the commercially insured and the uninsured, meaning working-age people and their employers. That produces two consequences worth weighing: the revenue yield would be lower than the size of the health sector suggests, making the replacement math harder, and the burden would concentrate on a narrower group than a broad-based tax implies.
Taxing health care is also unusual for a reason beyond politics. Consumption taxes are typically defended on the theory that people can adjust their purchases in response to price. Medical care does not work that way. Someone managing chronic illness cannot defer treatment in response to a tax the way they might defer buying a television, which means the tax functions less like a consumption choice and more like a surcharge on being sick. These taxes are unusual but not unheard of in the U.S., and that rarity reflects the difficulty rather than mere oversight.
What voters are actually deciding
The honest framing is that Amendment 5 is not primarily a vote on whether health care gets taxed, because the amendment does not tax health care. It is a vote on whether to move that decision from voters to the legislature.
If it passes, lawmakers gain constitutional authority to expand the sales tax to all goods and services and eliminate exemptions within three years, without returning to the ballot. What they actually do with that authority, which exemptions survive, whether prescriptions and doctor visits are protected, whether the income tax reduction ever fully materializes, would be settled in future legislative sessions.
That is the real question on August 4: not what the tax code will look like, but who decides, and how reversible that decision is. Supporters see a needed tool to modernize an outdated tax base and eliminate a tax on productivity. Opponents see a permanent constitutional grant traded for a conditional and uncertain benefit. Both are describing the same mechanism accurately.