Summary on Missouri Amendment 5 of 2026 (Income Tax Replacement)

These are the notes that folks requested from the Lawrence County Ballot Proposition Information Meeting last night (28 July 2026). My notes from Amendment 4 have also been posted. For this set of notes, I have to start out by explaining the physical demonstration a little bit, or, you could just watch it, link below.

Also see my Hancock Amendment self-guided tour.

Water and Pitcher Model For Tax Base: Save the Chicks!

I started my portion of the presentation with a physical model demonstrating tax base vs tax rate and necessities exemptions. These are features of tax policy that are hard for many people to envision. I, myself, often need to think about liquids and volumes. This is what started the back-of-the-envelope sketch that got borrowed by Carl Bearden for a revision of his white paper (Bearden June 2026).

The video of the demonstration was shared on Facebook. The demonstration itself happens in the first few minutes and then it continues with the resulting discussion between myself (as Mount Pleasant Committeeman), Committee Chairman Dane Roaseau (LCRCC), State Representative Mitch Boggs (R-157), and State Representative Darin Chappell (R-137). The video was recorded and shared by the Roaseaus.

• The colored water represents the income tax revenue that needs to be replaced.
• This is a fixed volume.
• If we pour the water into a narrow container (the tall graduated cylinder in the video), the water level will be high.
• A narrow sales tax covering fewer things requires a higher rate to make revenue.
• If we pour into the wide bin instead, the water level will be much lower: volume = base x height.
• A wider sales tax (covers more things) gathers the same revenue at a lower rate.
• Missouri's sales tax only covers about 30% of the consumer economy, partly because many goods which used to be taxed (think about records and entertainment) have moved to digital services.
• This is why Amendment 5 sets the stage to widen the sales tax base: it lets the sales tax rate remain reasonable.

Add Rocks

If you set out a trough of water for chicks or ducklings, the young birds will often get stuck in the trough and drown. To save the chicks, add rocks. When you add rocks, two things happen:

1. The rocks give the young birds something to stand on to avoid drowning and hop back out.
2. The water level is raised slightly.

This is the same way that necessities exclusions (like groceries) in sales tax work:

• They give people a shelter to provide the basics without tax (people don't drown).
• They raise the tax rate slightly for everyone.
• The more exclusions get dropped in the tax code, the higher the water rises.

Ballot Language and Amendment Text

The ballot language and the full amendment text can be found on the Secretary of State's Website. I do not ever recommend that anyone decide whether to support a constitutional amendment from the ballot summary alone, no matter who writes it.

What It Does

• Sets up a mechanism to phase out and permanently remove the income tax via revenue growth.
• Authorizes the MO GA to widen the sales tax base OR adjust rates within a five year period to replace income tax revenue.
• Sets limits on tax adjustments to be revenue neutral in the same bill.
Specifies how windfalls will be avoided at the local level.
• Leaves Hancock (§18 and §18(e)) protections in place before, during, and after the five year period.

My Analysis

• Strongly prudent and conservative approach on several fronts:
1. Splits framework that belongs in the Constitution from policy to be decided by the GA.
2. Fault-tolerant: Does not assume that revenue projections will be correct (what happened to Kansas) and reduces income tax based on actual revenue.
3. Allows a five-year period to negotiate and implement incrementally.
4. Any problems encountered can be fixed in statute, by IP (regardless of Amendment 4), or referendum.
5. Once gone, income tax stays gone (absent another amendment).
• The Missouri economic numbers show that a consumption tax + normal economic growth can replace income tax here.
• Missouri is 46th in the nation for per capita tax burden (only 4 states lower burden).
• 9 states have no income tax and 16 are heading in the same direction.
• None of those have obnoxious sales tax rates like opponents are predicting as nightmare scenarios.
• Missouri sales tax only covers about 30% of the consumer economy.
• Kehoe (backed by the MO Auditor and economist Aaron Hedlund, etc), suggests expanding the tax base to cover about 2/3 of the consumer economy.
• Will cover most of the income tax revenue.
• Leaves generous carve outs for necessities.
• Commitment that will not touch
1. Medical (federal law restricts state taxes anyway)
2. Agriculture
3. Real-estate
• And it is widely accepted (Governor, legislators) that the grocery tax can be eliminated.
• This would end up with a tax rate between 5-6%, slightly-reduced local rates (windfall), and the remainder of the income tax eaten up by growth.
• Carl Bearden (June 2026) also wrote a white paper that presents a model for a potential tax structure.
• Not important to agree with his ideas or numbers.
• Shows that numbers work and gives detailed starting point for exploring options.
• Consumption tax produces more stable revenue than income tax; wide and shallow is more stable than narrow and deep (see: (Bearden June 2026 p12).)
• Darin Chappel's FairTax proposal is in play as a package solution.
• Many people warn that all of these tax changes can be done without a vote after Amendment 5, but that is based on a mistaken understanding of what the Hancock Amendment already allows.

Possible Dangers

Unlikely Things People Throw Out

Most detractor nightmare scenarios are not credible:

• Predictions that we will have a wide and deep consumption tax not credible:
  • revenue neutrality prohibits.
  • No income-tax-less state has gone that route.
  • Hancock still prevents creep past elimination of income tax.
• Same goes for the GA not limiting grocery tax, providing core exemptions: it would be political suicide for no apparent reason.
• Providing necessities exemptions for low-income Missourians is straight-forward.
• People have choices about how/when to pay tax;
• In any case the rich consume more goods and services than the poor.
• Kansas style budget crisis is avoided by the framework.
• There is no double taxation
• the only way the income tax remains is if the consumption taxes fail to generate revenue.
• Taxes on real-estate sales. Already prohibited elsewhere, anyway excluded by definition of "goods" in law.
• Economic catastrophe causes revenue crisis
• If we do have an economic catastrophe, an income tax is the least stable revenue source; Staying with status quo would be worst choice.

More Likely Problems

But, there are some real potential problems. The biggest ones are:

1. No agreement on a plan within five years.
• Technical problem not that hard; human problem is real.
• Free-rider and holdout problem with exemptions could:
• Tank agreement.
• Sap revenue to shrink income tax.
2. Industry-specific carve-outs for consumption tax can corrupt wide and shallow.
3. GA could be too aggressive, not staging changes.
4. Changes do not meet revenue targets or growth takes longer than expected to develop.

On the Balance

All of these, however, are survivable and correctable. In the case of economic catastrophe, a transition to a wide and shallow consumption tax would be exactly what we would want.

As the Mises Institute pointed out after the Kansas failure, lower taxes (esp income tax) does generate growth, but growth does not immediately equate to revenue. Tax reduction primarily spurs savings and investment (reinforced here by consumption tax) and only secondarily generates revenue. Actual performance of the taxes depends on peoples' choices, inherently unpredictable.

But this is not really a big problem because the measure is built to reduce income tax as revenue is generated. There is no hard cap to force a budget crisis like Kansas. Even in the case of Kansas, as pointed out in (Jansen 2019), Kansas made every possible mistake, but it was still correctable and did no detectable long-term economic harm. They ended with a hybrid system: a reduced income tax (stepped back up a touch from the 2012 cuts) and an increased sales tax, overall moderate.

As for the corruption in carve outs, this is the most realistic problem. It is not, however, any different from what we have with income tax and is likely to be somewhat better by at least providing an opportunity to clean out decades of exceptions. This is almost certainly has many of the special interests panicked.

If no agreement can be reached, the income tax still goes away. The biggest downside would be not updating the sales tax base and making it long-term stable.

Hancock Amendment

Many of the misconceptions on Amendment 5 come from misunderstanding the Hancock Amendment. (Tsapelas 2024) provides a detailed history and reference on Hancock's benefits and problems. The Hancock Amendment is a critical piece of the Missouri Constitution. Understanding how it works is important beyond Amendment 5.

I have also provided an experimental AI-based self-guided tour of the Hancock Amendment.

Conclusion

Amendment 5 presents a significant opportunity to get rid of income tax. The need to have the General Assembly agree on a sales tax plan presents risks, but no extraordinary risks that do not already exist. The General Assembly already has significant power to rearrange taxes under the Hancock Amendment without a vote.

Bibliography/Further Reading

Bearden June 2026

Bearden, C. (2026). Revenue-neutral Tax Reform Sales Tax Base and Rates Model. https://www.dropbox.com/scl/fo/ofwcwlhya9twmsfb8wos6/AOMoWqWH17DJ8ZTQZ60yQ70/Missouri%27s%20Roadmap%20to%20an%20Improved%20Economic%20Future/Revenue%20Neutral%20Tax%20Reform%20-%20Suggested%20Sales%20Tax%20Base%20and%20Rates%20Model_V2.pdf?rlkey=6o9bxqbra2rhilkm0lcf08i4r&dl=0

Jansen 2019

Jansen, D. W. (2019). What Happened In Kansas: the 2012 Tax Reform, the Economy, and the Lessons for Us All [Technical report]. Show-Me Institute. https://showmeinstitute.org/wp-content/uploads/2019/10/20190722%20Kansas%20Tax%20Reform%20-%20Jansen.pdf

Tsapelas 2024

Tsapelas, E. (2024). MISSOURI ’ S HANCOCK AMENDMENT : A PRIMER [Technical report]. Show-Me Institute. https://showmeinstitute.org/wp-content/uploads/2024/04/20240306-Tsapelas-Hancock-Amendment.pdf

Quick Notes on Missouri Amendment 4 (2026)

Quick Notes on Missouri Amendment 4 of 2026 (Initiative Petition Reform)

I was asked last night after the Lawrence County Information Meeting to post these quick notes to counter persistent bad assumptions about Amendment 4 of 2026 (Initiative Petititon Reform). They are mostly the raw bullet points from my own notebook, but I have tried to touch up some of the links and citations to other notes and PDFs so that they will go somewhere for you. This is just a summary of what I talked about-- I have written in more detail in various places.

Ballot and Amendment Text

The ballot language and the full amendment text can be found on the Secretary of State's Website. I do not ever recommend that anyone decide whether to support a constitutional amendment from the ballot summary alone, no matter who writes it.

What It Does

• For amendments proposed by initiative petition only.
• The amendment must pass by a majority in each of the 8 congressional districts rather than
• a majority statewide only

Amendment 4 is a clumsy tool: of all of the different proposals for IP reform, I like it the least. Ron Calzone is correct on that point. But it plugs a hole now and it can be adjusted later (see below).

Two Major Wrong Assumptions

Initiative Petition is "the People" vs "the Legislature"

This is simply not true.

• "the people" had two options for amending the Constitution in the original design:
1. amendments proposed Legislature they elect and ratified by statewide vote
2. amendments proposed by delegates they send to constitutional convention and ratified by statewide vote.
• Initiative petition (Ch III:§49 & Ch III:§50) was bolted onto this as part of an early 20th century (Wilsonian) Progressive movement to bypass the structural guarantees of the constitution(s).
• IP is "direct democracy", which experience has demonstrated does not represent the "deliberate will" of "the people".
• What you are really looking at is the different methods by which "the people" amend the Constitution.
• Initiative Petition is the worst of the available methods
• Amendment 4 does not touch either the legislative approach or the convention approach.

The Legislature Will Never Vote to Reduce Its Own Power...

• ...therefore (says the argument), once Amendment 4 passes, we will never be able to fix the threshold for legislative amendments (which probably ought to be done).
• This is false for at least two reasons:
1. The convention approach is still open
2. IP itself was proposed by the legislature (88th GA, Amendment 3)
• So was, e.g., the addition of §18(e) to the Hancock in 1996
• Legislatures will vote to reduce their own power when they fear each other or fear a future legislature.
• This argument does not play strongly enough at the moment, but it will eventually.
• If it does not, a convention can force the change.

Additional Background

Dinan, J. (2019). Amending Missouri’s Constitution: Accounting for the Frequency of Amendments and Considering Revisions to the Amendment Process [Technical report]. https://showmeinstitute.org/wp-content/uploads/2019/10/20190731%20Amending%20the%20Constitution%20-%20Dinan_1.pdf

• This is often quoted by the opposition to Amendment 4 because it shows that the majority of amendments passed (1945-2019) are passed by the legislature, not by IP.
• While this is true,
• The report breaks amendments into categories with different dangers
• Policy-enactment amendments which bypass deliberative process and put policy in the Constitution (where it does not belong) are the worst danger
• Such policy-enactment amendments ALL come from IP
• A rash of IPs were passed between 1908 and 1945, so much so that the 1945 convention tried to tweak IP to dampen them
• A rash of damaging IPs has occurred since 2019.
• The report itself is very good and worth reading.

My Provisional Support For Missouri's Right To Farm amendment.

There has been a lot of controversy surrounding Constitutional Amendment No. 1 on the 5 August ballot in Missouri. Many people do not understand the potential meaning of the language or distrust the motives of the Amendment's promoters. I have personally supported "Right To Farm" proposals in the past, particularly as part of the Well-Fed Neighbor Alliance, and discussed potential language with State Senator Lembke's office several years ago. I have been opposed to Amendment 1 on the grounds that I was, like many others, uncertain of the meaning of the language and have spent a good bit of time over the last few days exploring that issue, as well as Facebook conversations with Tom Martz, Paul Curtman, and Shane Schoeller on the issue. As a result of my exploration, I am going to retract my opposition. I am not certain yet which way I will vote, but I do believe that the promoters of the amendment have taken care with the wording and that there is at least a good argument to be made about how the amendment will be interpreted. This post will explain some of what I have found to hopefully help others make their decision in the short time remaining to us.

I have tried to include direct links where possible to allow people to more quickly do their own reading.

Motives and Motivations

First of all, let me make clear my own motives. I am a disabled farmer, primarily raising sheep in a small family operation, first for wool but also for food, breeding stock, and other uses. We spin wool, knit, weave, and produce other fiber products, raise or wild harvest plants for natural dye use, from time to time market free-range eggs, raise a garden, and so forth. We have sold at farmers' markets in the past and currently mostly sell finished goods (e.g. woven shawls) at art festivals. Given that I am disabled, the size of the operation is limited to what my wife and daughter can do and what I can help with within my physical limits.

My wife and I are strong supporters of local cottage industry, small and family farms, and self-reliance. We were involved with the Well-Fed Neighbor Alliance from its beginnings and helped Galen Chadwick organize and launch the first local conference (under the banner of the WFNA and the Statesmen For Our Constitutional Republic). We are active in the Ozarks Property Rights Alliance, Lawrence County Chapter. This essay is, however, my own work and is not an official statement of any other organization.

The motives of the core promoters of this proposal are also very clear to me. State Representative Paul Curtman, Shane Schoeller, and State Senator Jim Lembke, in particular, are people I respect, who were involved in the promotion of this amendment and whom, largely, I find know what they are doing. I do not suspect them in any way of being a front for Monsanto or corporate agriculture. Whether the amendment effectively does what it claims to do and is a good idea is and has been my concern.

Tom Martz is also a voice I respect, however, and he, with some justice, has opposed this idea from the beginning. Tom Martz opposes a lot of things, and some people may get the idea that he is a nay-sayer and an alarmist, however, he also very consistently puts a lot of his own sweat, blood, and toil into coming up with alternative approaches and solutions, such as all the work he put into the Springfield audits and the good which has come out of that. Both sides have very good and respected voices. We should not lose sight of that.

The Amendment Text

The proposed text would go into Article I (Bill of Rights) of the Missouri Constitution:

Section 35.  That agriculture which provides food, energy, health benefits, and security is the foundation and stabilizing force of Missouri’s economy.  To protect this vital sector of Missouri’s economy, the right of farmers and ranchers to engage in farming and ranching practices shall be forever guaranteed in this state, subject to duly authorized powers, if any, conferred by article VI of the Constitution of Missouri.

The first sentence is preamble and has no legal import. The second sentence, first clause states the rights to be protected ("the right of farmers and ranchers to engage in farming and ranching practices") and the second clause states that this right is subject to constitutional powers of the local and county governments (of which there are extremely few). Concern over the text revolves around the precise definition of "farmers" and "ranchers" and over the escape clause for local/county governments.

Looking At Definitions

One of the confusing aspects of this is that there are multiple potential definitions of farm or agriculture which might be applied from state or federal law. Typically, if not expressly defined, constitutional terms take their common language or dictionary meaning, The Constitution underlies statute, so statutory definitions can sometimes set up a "chicken and egg" problem, especially when statute changes over time.

Paul Curtman states that the definition of farm which would control is in RsMO 350.010(6):

"Farming" means using or cultivating land for the production of (a) agricultural crops; (b) livestock or livestock products; (c) poultry or poultry products; (d) milk or dairy products; or (e) fruit or other horticultural products, provided; however, "farming" shall not include a processor of farm products or a distributor of farming supplies contracting to provide spraying, harvesting or other farming services.

There are potentially other places a definition could come from, including the Department of Revenue, registrations of "agricultural land", etc., but I have to agree given my digging in statute and what case law I could find, that this definition is the most likely and that it is not incompatible with common or dictionary definitions of "farm" or "ranch". I have spent a lot of time digging through statute but I am not a lawyer and there is always the possibility that I have missed something. Your mileage may vary.

Ranching practices seems redundant to me in this context since the definition of "farm" includes livestock and the definitions of livestock are fairly broad. For example in RsMO 277.020:

(1) "Livestock", cattle, swine, sheep, ratite birds including but not limited to ostrich and emu, aquatic products as defined in section 277.024, llamas, alpaca, buffalo, elk documented as obtained from a legal source and not from the wild and raised in confinement for human consumption or animal husbandry, goats and poultry, equine and exotic animals;

Note that animals not raised for human consumption, such as horses, are included. There are a number of definitions of livestock in Missouri statute, but the all seem to be at least as inclusive. It may be possible that dogs or other animals raised for farm use might be included or included for those specific purposes (e.g. sheep dogs or livestock guardians).

The backyard raising of chickens or growing corn in an urban garden might not be included under these terms, but they are not specifically mentioned now.

There is already some protection from "agricultural nuisance" suits in RsMO 537. If you raise pigs and someone moves next door to you (after you raise pigs), they cannot readily claim in court that your pigs are a nuisance. The proposed amendment would leave that protection intact and potentially strengthen it. I have some concern about the impact on 537.295.3 which states:

The provisions of this section shall not affect or defeat the right of any person, firm or corporation to recover damages for any injuries sustained by it as a result of the pollution or other change in the quantity or quality of water used by that person, firm or corporation for private or commercial purposes, or as a result of any overflow of land owned by or in the possession of any such person, firm or corporation.

My initial reading of case law suggests however that actual damage caused by farming or a public health threat from a CAFO would be supported as reasonably overriding the offender's right to farm or ranch and the article VI escape clause retains the ability for localities to prevent such excesses.

For a specific (and exhaustive) discussion of the effects of Article VI on this language and what precisely a locality might be able to do, see David Cosgrove's excellent analysis.

Conclusion

There is much more which can be written, but given the limited time, at some point we need to roll the dice and take our chances. In some sense, if people are concerned about the text, the prudent case would be to vote it down and we could always explore the issue later. Amending the Constitution is always a ticklish and tricky proposition. My specific concerns over the wording, however, are greatly reduced and I am not 'worried' about the amendment. Given my long-time support of protections for the right to farm, I may end up voting for it tomorrow.

Whether this amendment passes or not, nothing changes the need to continually get good people into office, and in Missouri, good people who respect the traditions of farming, ranching, and local industry. In order to get good people into office, they must make it into the primaries, and, in our disagreement over Amendment 1, we must not distract ourselves from the importance of the 5 August primary itself.