Lawmakers work in the Missouri House chamber on April 21, 2026, in Jefferson City, Missouri. Missouri is asking voters whether to gradually eliminate its income tax and shift more toward taxing consumption. (David A. Lieb/AP)
Missouri, Iowa, Indiana and Wisconsin all are thinking creatively about taxes
By The Editorial Board | Chicago Tribune
Illinoisans often assume high taxes are simply the unavoidable cost of living in the Land of Lincoln. But just across our borders, states are making some very different choices.
Missouri is asking voters whether to gradually eliminate its income tax and shift more toward taxing consumption. Indiana continues to emphasize fiscal restraint and has approved further tax reductions. Wisconsin used part of a multibillion-dollar surplus to enact income tax cuts and has continued debating additional relief. Iowa phased out its graduated individual income tax in favor of a flat rate of 3.8%.
Maybe you think Missouri is making a mistake or Iowa has gone too far. Maybe Wisconsin will reverse course. That’s not our point here. What stands out for us is that our Midwestern neighbors are at least practicing some creative taxation thinking.
Take what is going on in Missouri. On Aug. 4, voters get the chance to weigh in on whether Missouri should fundamentally rethink how it taxes its citizens; specifically whether the Show-Me State should gradually shift its tax burden away from income and toward consumption.
Ironically, Missouri currently has the very tax structure Illinois progressives have long sought: a graduated income tax. Even so, its top marginal income tax rate (4.7%) is lower than Illinois’ flat rate (4.95%).
Missouri’s average combined state and local sales tax rate also remains far below the rate in Illinois. Approval of the amendment could eventually narrow that gap, depending on how lawmakers implement the shift. Even then, Missouri would have a long way to go to match Chicago’s 10.25%.
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Related: “(Meanwhile) Income tax CUT on Missouri ballot; Illinois may see more outmigration”
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