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institute on taxation and economic policy
Analysis Warns 'The Wealthiest' Will Benefit If Missouri Passes Dark Money-Backed Amendment 5
As The Kansas City Star detailed last week, Amendment 5 is a "top priority for Republican Gov. Mike Kehoe," and Missouri Promise PAC, the main campaign supporting it, received "$9.6 million from six organizations or groups that do not have to disclose their donors," also known as dark money.
While some of the campaign backers remain unknown to voters, the Institute on Taxation and Economic Policy (ITEP) in Washington, DC aimed to shed light on the specifics of the amendment's anticipated impact with its new policy brief.
"Amendment 5 asks Missouri voters to approve a tax shift without telling them which purchases will be taxed or how high sales taxes will rise," said ITEP analyst and brief author Eli Byerly-Duke. "What is clear is who would benefit: the wealthiest Missourians. Working families and seniors would be asked to make up the difference."
Missouri's individual income tax "makes up about 64% of the state's general fund and is the major funding source for state investments in infrastructure, schools, healthcare, public safety, and other services," the brief explains. "Low- and middle-income Missourians already pay a disproportionate share of the taxes to fund public services," and swapping income taxes for higher sales taxes "would shift even more of this responsibility from the state's highest-income individuals to teachers, farmers, truck drivers, and other middle-income Missourians."
Specifically, Byerly-Duke found that "middle-class Missourians with incomes of about $50,000 to $80,000 will pay $535 more in taxes if the personal income tax is eliminated and the sales tax expanded," all while Missouri's top 1%—or those with incomes of $689,300 and above—see an average tax break of $39,978.
The brief also highlights that "neither the Missouri Legislature nor governor has explained exactly how they will expand sales taxes if it passes. They might increase the sales tax rate, or they might expand the sales tax to include purchases of services that are not currently taxed, such as home repair and insurance, car repair and financing, personal care services such as hair or nail care, or medical services. Taxing these items will cost middle-income households a larger share of their incomes than higher-income households, but middle-income families will not get a commensurate benefit from the income tax elimination."
"For senior citizens, active-duty military families, and military retirees, the impact would be even worse," the report continues. "That's because Social Security benefits, active-duty military pay, and military pensions are already exempt from Missouri income tax, so households for whom those are the sole source of income would get no benefit from Amendment 5. For a middle-class Missourian earning between $49,100 and $79,700, this would mean an increase of $1,600 in taxes every year. Overall, seniors alone would see a net tax increase of about $335 million and each pay $365 more, on average, each year."
The brief bolsters the case for voters to say "No on 5," as Protect MO Taxpayers encourages. The "no" campaign's website warns that the amendment "hits seniors, retirees, veterans, and disabled persons hardest. Those on tight fixed incomes may not pay income tax on their limited income, but they will certainly be hurt by higher sales taxes on goods they buy every day, such as groceries, medicine, and gas, and services they use every day, from haircuts to car repairs to healthcare and housing."
"Amendment 5 hits working families hardest of all, with higher sales and use taxes estimated by the nonpartisan Missouri Budget Project to cost the average Missouri family about $500 more in taxes per year overall," Protect MO Taxpayers' site says, also pointing to concerns that it will "increase the tough economic times in rural Missouri" and "make the economic struggle even harder for small businesses."
The proposal "is a severe hit for renters who are already struggling to make ends meet," and "crushes the dreams of Missourians who want to buy or sell a home," the site adds. "Amendment 5 hits active-duty military, who do not pay state income tax but will face higher prices off the base with sales taxes that could roughly triple. This will mean less retail business and economic harm in our neighboring military host communities."
Top 1% to Get $117 Billion in Trump Tax Cuts This Year as Bottom 95% Pay More
The bottom 95% of Americans will generally see higher taxes, according to report author Michael Ettlinger, a senior fellow at ITEP and the University of New Hampshire's Carsey School of Public Policy. The middle 60% will see an average increase of $900—though that estimate tops $1,000 for taxpayers in Alaska, Florida, Georgia, Idaho, Nebraska, North Carolina, South Dakota, Texas, Utah, Vermont, and Wyoming.
The primary drivers of tax hikes for working people are Trump's tariffs—which his administration continues to pursue despite a major setback at the US Supreme Court—and the so-called One Big Beautiful Bill Act (OBBBA), the budget reconciliation package that congressional Republicans passed and the president signed last summer.
The OBBBA slashed programs for the working class, including food assistance and Medicaid, and failed to extend Affordable Care Act premium tax credits that helped people afford health insurance. The Republican package is also expected to give the wealthiest 1% of Americans $1 trillion in tax cuts while adding $4.6 trillion to the federal deficit over the next decade.
This year alone, "the highest-income 20% get a $380 billion tax cut, with $117 billion going to the richest 1% alone," Ettlinger detailed. "To put the $117 billion going to the top 1% in 2026 in perspective, it is more than the federal government will spend in 2026 on the combined budgets of the Department of Education, Department of Transportation, Department of Justice, the State Department, the National Aeronautics and Space Administration, the Environmental Protection Agency, the National Endowment for the Humanities, and the National Endowment for the Arts."
"Or, put in another context, that $117 billion could buy every Major League Baseball team (all of them together) or pay for the combined cost of every wedding in the country for a year, as we described in July, along with other comparisons," he added.
(Image by Institute on Taxation and Economic Policy)
Ettlinger pointed out that "the wealthiest have also saved many billions with the elimination of more than $40 billion over 10 years in IRS tax enforcement funding that was aimed specifically at cracking down on tax evasion by the wealthy. The Trump administration has also, administratively, strangled IRS enforcement initiatives targeted at high-wealth tax sheltering."
The expert also noted that the "OBBBA included large tax cuts for corporations, and the administration has added on to the benefits of these tax cuts with legally doubtful regulatory changes." For example, some major companies had an effective federal income tax rate of 0% in 2025, including Chenier Energy, LiveNation, Peter Thiel's Palantir, Elon Musk's Tesla, and Yum! Brands, whose subsidiaries include the fast food chains KFC, Pizza Hut, and Taco Bell.
Jeff Bezos' Amazon had an effective tax rate of 1.4%. For Meta, the parent company of Facebook, Instagram, and WhatsApp, it was 3.6%. Alphabet, the company behind Google, had an 8% rate. Ettlinger stressed that "these companies' ultralow tax bills are just the tip of the iceberg of what has been done to business taxes in the first year of President Trump's second term. From OBBBA alone, corporations and other businesses will pay $234 billion less in 2026 and $1.7 trillion less over 10 years."
It's not just rich Americans who are benefiting from Trump and his party's policies. As Ettlinger explained: "A total of $32 billion in tax savings from OBBBA will go offshore in 2026. Many foreign shareholders are likely to end up paying zero US corporate tax despite benefiting from the US economy and the role of the government in sustaining it."
The report concludes with a warning: "Unfortunately, it could get worse. The administration is being heavily lobbied to add to its unlawful regulatory record by indexing capital gains for inflation—which would be a benefit hugely skewed to the wealthy. In addition, the congressional Republican Study Committee has a tax plan that would, likewise, be of substantial benefit to those with the highest income and wealth."
Early last month, Sens. Ted Cruz (R-Texas) and Tim Scott (R-SC) sent a letter urging Treasury Secretary Scott Bessent to make the change to federal tax on capital gains, or the profits from selling investments, including bonds, real estate, and stocks.
"Ted Cruz is asking the Treasury Department to break the law to give another round of tax breaks to the ultrarich," Senate Finance Committee Ranking Member Ron Wyden (D-Ore.) responded at the time. "These guys can’t help themselves."
GOP Megalaw Will Mean Tax Hikes for Many Poor Americans as Soon as 2026: Analysis
But the lawmakers also allowed an enhancement of tax credits that helped millions of Americans pay for health insurance to expire and those effects will be felt much sooner, according to a study published Tuesday by the nonpartisan Institute on Taxation and Economic Policy (ITEP)
That enhancement—passed in 2021 as part of the American Rescue Plan and extended until 2025 by the Inflation Reduction Act—provided nearly 20 million low- and moderate-income Americans who purchased health insurance on state and federal exchanges with tax relief that significantly shrunk their insurance premiums.
According to the Center on Budget and Policy Priorities, recipients saved over $700 on average on their insurance premiums as a result of the tax breaks.
Largely as a result of this policy change, the ITEP study projects that the poorest 20% of Americans will end up paying $140 more on average than they paid before the law passed as soon as next year. The next poorest 20% will end up paying $100 more.
(Chart: Institute on Taxation and Economic Policy)
An estimated 4.2 million are also expected to lose health insurance as a result of the change, according to the Congressional Budget Office (CBO), adding to the 10 million it estimates will lose insurance due to Medicaid cuts.
This does not even take into account the effects of President Donald Trump's regressive tariffs, which will also hit the poorest Americans hardest by increasing the cost of goods.
"The central fiscal priority in the megabill is to reward the wealthiest Americans with even more tax cuts, but to try to disguise that as a boon for working families," Jon Whiten, the deputy director of ITEP told Common Dreams.
A previous ITEP estimate found that for everyone except the top 20% of Americans, the cost of the tariffs will either largely offset or surpass the amount they'll save due to the tax breaks in the law.
(Chart: Institute on Taxation and Economic Policy)
Meanwhile, the law is estimated to give the richest 1% of Americans $117 billion in tax cuts next year. That amount far exceeds the tax savings of the bottom 60% of Americans put together, who will cumulatively save just $77 billion.
The report found that even foreign investors who own shares in U.S. companies will benefit more in 2026 than many of the poorest Americans due to the law's extension of corporate tax breaks: They will receive $32 billion in tax cuts in 2026 compared to just $1.5 billion for the bottom 20% of Americans.
"This bill is already very unpopular, and most Americans see it for what it is: a big boost for the richest folks and not much for anyone else," said Whiten.
According to polling last week by the Associated Press-NORC Center for Public Affairs Research, 6 in 10 Americans believe the law will do more to hurt than help lower-income people.
Whiten added, "People are likely to continue to sour on it as they learn more about it and see how it impacts their family finances."
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