Cross Post: Every Missouri Activity Taxed under Proposed Bill

 Is it even possible to trigger the relief promised by the 0% Income Tax Relief Bill? The math says no. 0% means nothing left untaxed. 

By David Rice

Yesterday, I wrote an article exposing the swindle by the Americans for Prosperity (AFP), American Legislative Exchange Council (ALEC), and Governor Mike Kehoe with their new Tax Increase on Missouri families. I shared how State Senator Mike Moon’s alternate Senate Bill 1029 would reduce Corporate Taxes to 0% (which reduces everyone’s costs at the store because taxes belong to the consumer, not corporations).

House Bill 100 and House Joint Resolution 1 both seek to defraud the voters with language that appears to reduce the Income Tax to 0%, but only after a complex series of triggers occurs, guaranteeing that the State continues to receive all of its income, plus it never reduces its spending. 

When I ran the numbers on the AFP/ALEC plan to replace Missouri's income tax with their proposed Value Added Tax (VAT), I found the numbers came up short. There doesn’t seem to be a way for the VAT taxes to rise to the amount that would provide relief for the State Income Tax. Even with the most generous assumptions, the math exposes why this plan either can't work or isn't what they claims.

This leads to the inevitable conclusion—this is a swindle, and they are only creating this as a new tax burden because they are afraid they won’t be able to balance the budget if the Federal gravy train disappears.

Current Revenue vs. Proposed Collection

Missouri currently collects $13.35 billion in income tax revenue. To replace this through the proposed 3.775% VAT, let's calculate the maximum possible collection:

Monthly VAT from Average Family:

 

These are just some small examples of how the State will implement new taxes on your income. They say it’s a 0% Income Tax, but any new tax is an Income Tax. Once the State has decided that tax services are acceptable, local counties and cities will follow suit. 

Remember, and this is important, the proposed bill doesn’t replace the current sales tax system already in place. IT ADDS TO IT. This is a new tax, not a replacement tax.

Annual VAT: $2302.75

If, and only if, we based our VAT collection on the best-case scenario where a Median Missouri household purchased large appliances, repaired their home, and bought a new car, they would pay $2302.75 in taxes. While this seems like a good deal, remember that your income taxes are only reduced by 1% if they have a surplus of $120M in reserves first. So, they have to first make all of their revenue. 

So, that begs the question, in the best-case scenario for AFP/ALEC, can this tax scheme generate enough money to come up with $13.35B?

Let's go with a more reasonable estimation that every family will spend $75 a month in Value Added Taxes, which seems less at first than the $225 a median family pays on average in State Taxes (that makes around $69K), and do the math. We see that the basic VAT revenue isn’t nearly enough. 

• Per family: $75.51 × 12 = $906.12

• Missouri households: 2.5 million

• Maximum annual collection: $2.265 billion

Even Adding Big Purchases:

• New car ($30,000): $1,132.50 VAT

• Home repairs ($5,000): $188.75 VAT

• Appliances ($2,000): $75.50 VAT

Total big purchase VAT: $1,396.75

If every household made these major purchases annually (an absurdly generous assumption), it would add another $3.49 billion.

If we add the best-case scenario where every family makes major purchases like a car yearly (remember they only make $69K annually), we only come up to ~$5.76B. This is far short of the $13.35B needed to make up the current State Income Tax. 

Best Case Total: $5.76 billion

They have done the math at the AFP/ALEC, still wrote the bill, and sold it to Davidson and Trent to champion. Though Davidson and Trent probably aren't intelligent enough to read bills given to them, Mike Kehoe is smart enough to know the purpose of this bill. One should not underestimate Kehoe’s intelligence or ruthlessness. 

Hidden Utility Costs

Further, the AFP/ALEC plan contains another cost many might miss. The bill removes Missouri State constitutional protections against taxing services, specifically repealing this protection:

"[In order to prohibit an increase in the tax burden on the citizens of Missouri, state and local sales and use taxes (or any similar transaction-based tax) shall not be expanded to impose taxes on any service or transaction that was not subject to sales, use or similar transaction-based tax on January 1, 2015]."

It replaces it with language applying the new 3.775% tax to "all sellers for the privilege of selling tangible personal property or rendering taxable services."

Here's what this means: Without specific exemptions for utilities (which the bill doesn't provide), Missouri families would pay this new 3.775% tax on:

• Electric bills

• Gas bills

• Water/sewer bills

• Telecommunications

• On any New Future Service that has yet to be Invented

For a family with average utility costs:

• $200 monthly electric bill: $7.55 new tax

• $100 monthly gas bill: $3.78 new tax

• $75 monthly water/sewer: $2.83 new tax

• $150 monthly telecom: $5.66 new tax

Total New Monthly Utility Tax: $19.82

This would be in addition to existing utility taxes and fees, adding nearly $240 annually to an average family's utility costs. Services, utilities, and groceries will go up in cost, while the Missouri Budget will also magically increase because of the extra revenue. You grow poorer while the government grows wealthier. Isn’t this why you vote for a Republican Supermajority?

The Gap

As extremely generous as these assumptions are to give them the benefit of the doubt, the VAT would collect less than half of current income tax revenue. This means one of three things must be true:

1. The VAT rate would need to be at least triple the proposed rate

2. They plan to keep both tax systems indefinitely

3. State spending would need to be cut by over $7 billion

Option three seems unlikely since Kehoe has presided over increasing the spending from $27B to $54B as Lt. Governor. One of the things he has not promised on the campaign trail is to cut spending. 

This leaves us with a much higher VAT rate or a permanent dual tax system. I expect they will provide us with a dual tax system that our cities and counties will replicate. 

What They're Not Telling You

The requirement that the Tax Reform Fund maintain a $120 million balance before any income tax reduction makes more sense now. Even the language is ambiguous. It has to be equal to or greater, which means reaching $120M doesn’t mean an automatic trigger. It could be delayed if they choose not to provide the tax cut to the Income Tax rate. Even generous math shows this VAT can't possibly replace income tax revenue, and it’s hard to believe they don’t know it is limited in its ability to generate its promised results. 

This means Missouri families would:

1. Pay new VAT taxes on everything—everything

2. Keep paying income tax because revenue targets won't be met

3. End up with a higher total tax burden

4. People will develop an underground system to avoid the VAT system, leading to regulations and fines by these managing bureaucrats to take more money from everyone.

Under Mike Moon's plan, Senate Bill 1029, corporate tax reduction directly lowers prices without adding new taxes. The AFP/ALEC plan adds new taxes, making it mathematically impossible to deliver promised relief.

The numbers don't lie. This isn't a tax reduction plan—it's a tax expansion plan disguised as relief. It was like this was written by Joe Biden to give money to the Ukrainian refugees, but then only a fraction of the funds actually provided any relief, and $100B just disappeared. 

We should see Kehoe as just another Joe Biden—a career politician only interested in stealing money from you to give to his political allies and government bureaucracies. 

We need to eliminate our Income Tax. We need to eliminate our Corporate Taxes. We should minimize any taxes, including property taxes. We have too much Government, which creates this heavy tax burden. We should cut as much of both as possible, eliminating taxes and government to the bare bone. This would Make Missouri Great Again. 

These Bills, introduced by Davidson and championed by the grunts like Trent, are designed to swindle voters into thinking they are getting relief from oppressive government overspending but are increasing the taxes and guaranteeing the government can continue to spend at the astronomical rates it is paying.

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Crosspost: 0% Income Tax is Managed Decay

 By David Rice

According to the Missouri Independent, Mike Kehoe stated during the campaign, “Since I’ve been in state government, we’ve cut the income tax from 6% to 4.7%,” Kehoe said. “I have backed $2.4 billion in tax cuts since I’ve been in office. But now, we need to take that to zero. That’s a key to our economic development strategy.”

 He’s working closely with two organizations, Americans for Prosperity and the American Legislative Exchange Council, to help push bills through this session to accomplish his campaign promise.

@RareCamellia [Camellia Peterson] is an AFP Lobbyist, self-declared Libertarian [Big-Government Libertarian], and School Choice [Tax-Funded Private and Homeschools] proponent. Experience has shown that it is always worth investigating how her benefactors manipulate the tax code if she is behind something.

Missouri's 2025 legislative session has revealed two competing visions for tax reform, each with dramatically different impacts on how Missourians will pay taxes. One plan aims to directly reduce taxes, while another reorganizes how taxes are collected while maintaining state revenue. 

The bill Kehoe supports doesn’t reduce spending, though I am sure they will claim their pretensions of tax cuts. Under Kehoe’s tenure as Lt. Governor, spending in Missouri doubled from ~$27B to ~$52B. This year, his budget is $54B. Kehoe stated they cut $2.4B in tax cuts, yet they spent so much money that it is hard to see where the tax cuts occurred.

 Bill Sponsors

Senator Mike Moon, widely recognized as the Senate's most conservative member, has introduced Senate Bill 1029. His proposal would phase out corporate income tax entirely by 2029, reducing it by 0.8% each year until it reaches zero.

On the other hand, Representative Bishop Davidson, not known for conservative values, introduced House Bill 100 and House Joint Resolution 1. These bills are backed by Americans for Prosperity (AFP), a pseudo-conservative advocacy group, and the American Legislative Exchange Council (ALEC), an organization that develops model legislation for state lawmakers. 

Bills are often written by front groups like ALEC, who then convince Reps like Davidson to present them in exchange for support during their runs for office. Reps like Davidson rarely read the bills but are convinced easily because they want the office and the prestige that comes with the office.

Several senators, including Curtis Trent, Ben Brown, Nick Schroer, and Jill Carter, have filed identical bills to increase the chances of passage. These senators have shown more interest in serving their own re-election than their constituents. 

Two Different Approaches

Moon's approach is straightforward: remove corporate taxes that businesses currently pass on to consumers through higher prices. Companies paying less in taxes can reduce prices on everyday items like groceries, shoes, and gas. His bill states, "Beginning with the 2029 tax year, there shall be no income tax on corporate income."

The AFP/ALEC plan is far more complex—this complexity is purposeful. They don’t want you to be able to read it or understand it. They disguise it using legal code. While marketed as an income tax reduction, it introduces a European-style consumption tax system known as the Value Added Tax (VAT). Here's how it works:

First, they expand what can be taxed. The plan removes Missouri's current ban on taxing services (adding a new tax) and sets a sales tax rate of "three and seven hundred seventy-five thousandths percent" on goods and services. This means you'll pay taxes on products and services like car repairs, haircuts, and professional fees. 

This is taking more money out of your pocket that you can’t afford and giving it not to the business owner but to the government. Taxes—corporate taxes—always go to the government. They don’t go to the business. The people who pay for them are the end consumers—you and me. Mike Moon understands this. AFP/ALEC also assumes you’re stupid and will be easily fooled. 

Second, they create a "Tax Reform Fund." The bill states, "if the amount of net general revenue collected exceeds the anticipated general fund revenue expenditures for a fiscal year by one million dollars or more," that extra money goes into this fund.

Finally, they promise income tax relief, but with conditions. The law says income tax rates can only be reduced "if the tax reform fund reaches and maintains a minimum balance that is greater than or equal to one hundred twenty million dollars." In other words, you'll only see income tax relief if the state collects enough extra money from the new service taxes.

Here is Mike Moon’s Plan:

1. People won’t give the government any more money when they buy goods through corporate taxes. 

2. The end.

Here is the AFP/ALEC Plan

1. People will now have a new tax through haircuts, car repairs, and professional services. 

2. People will pay more for groceries, gas, and goods.

3. If people have paid enough money through the VAT tax system and been good boys and girls, and only if the government gets $120M in reserves will they get an income tax break.

4. There are no guarantees that there will be a reduction to 0%. It’s only proposed.

The government does not have to reduce its spending but is encouraged to spend more under this model. Under Mike Moon’s model, the government has to reduce its spending because it generates less revenue from the taxpayer. 

Understanding the European Model

The AFP/ALEC plan mirrors the Value Added Tax (VAT) system used in Europe. Under a VAT system, taxes are built into the price of goods and services at every step of production and sale. While your paycheck might look bigger because of reduced income tax, you'll pay more every time you purchase anything from a good to a service.

So, the corporations still have to pay their taxes to Missouri every step of the way under the AFP/ALEC plan, which gets pushed to you. Then, they will add new taxes, which get driven to you again. The corporation doesn’t pay taxes on anything. The consumer pays taxes on everything. Taxes for a business are a cost built into the price of every tube of toothpaste, every roll of toilet paper, and every bag of Tostidos. 

The AFP/ALEC plan doesn’t assist you or save you money unless you can somehow drop out of the economy and live as a homesteader. Yet, this won’t work because they will rely on income tax if you do. You would have to quit working and buying not to pay any taxes into their system. A few of us are hardy enough to do that, but most of us do not have the resources to live as a homeless person. 

Think of it this way: Moon's system recognizes that government taxes on businesses make your groceries, shoes, and gas more expensive. He wants to make those items cheaper by removing those taxes. The AFP/ALEC system says they'll give you more money in your paycheck, but only after you've paid higher prices on everything you buy and if the state collects enough revenue from those higher prices.

Impact on Missourians

The difference between these approaches is significant. Under Moon's plan, corporate tax reduction would directly lower business costs, potentially reducing consumer prices. 

Under the AFP/ALEC plan, while your paycheck might eventually show less tax withholding, you'll pay new taxes on services and likely higher prices on goods to make up for it without forcing the government to be lean or to force the government to reduce its budget. If the government never reduces its budget, it may have enacted a VAT and an income tax system, which we’ll never get rid of.

Governor-elect Mike Kehoe has promised to eliminate Missouri's state income tax—but you can be sure he will plan to increase your tax burden. The state receives 65% of its revenue ($13.35 billion) from income taxes. [Consider how much of our revenue comes from other sources and how much we overspend right now.]

In 2024, Missouri’s income tax declined for the first time. Our population is flat and not growing. Our children are not being born. Our people are retiring and aging out of the job market.

Do you understand why they want a VAT? Because they can tax retirees using a VAT when they can’t tax their retirement accounts. This is about an aging population that must be taxed to maintain enormous expenditures.

 

With more young people postponing families, birthrates plummeting, and family formation not occurring until a later age, AFP/ALEC is also calculating they can take more of the expendable income from these young individuals rather than encourage them to have families and have children. They are managing our decline rather than trying to head it off. They have decided the culture war is lost (a strange thing for supposedly conservative groups to give up on), and they are helping RINO legislators capitalize on it to spend more money like Democrats. 

 

The AFP/ALEC plan ensures this revenue continues through expanded sales taxes, while Moon's plan seeks an actual reduction in total tax collection.

For Missouri taxpayers, the choice is between a genuine tax reduction that could lower prices and our budget versus a restructuring that maintains state revenue while making taxes less visible. While the AFP/ALEC plan's promise of zero income tax sounds appealing, the reality is that Missourians could end up paying the same amount or more in total taxes, just in a different way.

The battle over these competing visions will likely define Missouri's 2025 legislative session. Kehoe’s plan, backed by the AFP/ALEC, aims to continue spending at unsustainable levels through a regressive tax structure to take money from families who can’t afford to spare it.

Mike Moon plans to reduce the costs for every family across the state by removing the government’s invisible hand from business costs that we don’t see in gas, groceries, and goods. Mike Moon’s plan doesn’t add a new tax to our services or lock us into a new tax in our code that we may never remove again.

Conclusion

The contrast between these approaches reveals more than competing tax policies—it exposes fundamentally different visions for Missouri's future.

The AFP/ALEC plan represents sophisticated bureaucratic management that accepts demographic decline as inevitable. It aims to maintain high government spending through complex tax mechanisms by shifting tax burdens to young professionals and retirees while making taxation less visible but more pervasive. It's a nuanced strategy for managing Missouri's diminishing population and changing demographics without addressing the root causes of decline.

Moon's approach, by contrast, represents a vision of economic liberty. By removing corporate taxes that inflate the cost of everyday goods, his plan returns money directly to people's pockets. This gives families more resources for formation and growth while forcing the government to operate within reduced means. Rather than managing decline through bureaucratic complexity, it trusts Missourians with their own economic choices.

The fundamental difference isn't just about tax rates or revenue collection. It's about whether Missouri will accept and manage its decline through sophisticated tax schemes or potentially empower its citizens through economic freedom to reverse these trends. 

Moon's straightforward plan offers a genuine reduction in tax burden and government scope, while the AFP/ALEC proposal ensures continued high spending through an intricate web of consumption taxes.

For Missouri's future, the choice is between managing decay and enabling renewal.

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