Proposition A, passed by Missouri voters last November, requires that Kansas City and Saint Louis allow citizens the opportunity to vote on the continuation of their local earnings taxes within six months of the measure’s passage. Voters may decide to maintain their earnings taxes at that time, or they may choose to sunset it over the coming 10 years. As they weigh their decision, it is important for officials to begin considering alternative methods by which their cities can raise revenues that will fund necessary services.

Although the theory behind replacing earnings taxes with other revenue sources is fairly straightforward, its empirical importance has not been settled. The purpose of the present essay is to offer a new perspective on the possible empirical implications of city earnings taxes in Saint Louis and Kansas City.

Which tax structure — sales or income — is most preferred by the typical Missourian? Because both types of taxes are distortionary, it is difficult to tell whether welfare is higher under the system relying more heavily on the income tax or under the system relying more heavily on the sales tax. This essay uses quantitative methods built on logically consistent economic theory to compare welfare under the two alternative tax structures.

A tax-swap proposal to eliminate both Missouri's personal income tax and corporate income tax in favor of a static revenue-neutral sales tax increase is currently edging ever-closer to becoming a constitutional amendment. The benefits from reform could be enormous if the process is administered well and the constitutional amendment is carefully crafted. 

Missouri's economic development and growth rates are chronically below average. During the past 10 years, employment has grown 8.8 percent nationally, while Missouri has boosted jobs by only 6 percent. Economists have provided one explanation for the state's lagging performance: Missouri's personal income tax rates.

The state government in Missouri has issued $3,478,108,538 in targeted tax credits since 2000. Meanwhile, there is much evidence that this expenditure doesn't encourage economic activity and job growth. This essay explains how targeted tax credits programs in Missouri are a significant problem that negatively affects Missouri's economy.