Missouri lawmakers are considering a proposal to abolish the state's income tax and replace it with a sales tax. They're not alone: Last year, Mississippi approved legislation that will decrease the state income tax over several years until it's eliminated. That follows in the footsteps of Kentucky and Oklahoma. New Hampshire, which has no income tax, phased out its tax on interest and dividends. Several states making the move are considering sales taxes to fill the revenue gap, and they have the backing of the White House. But a new report warns that sales taxes may have to be higher than anticipated to make up the difference—unless state governments shrink in size and expense.
