The Three-Legged Stool: Why a Mix of Taxes Protects Schools

Why the mix protects you

Here’s the key fact most people don’t know: the income tax and the sales tax don’t drop at the same time or for the same reasons.

When a recession hits people’s jobs and paychecks, income tax revenue falls — but people still buy groceries, gas, and other basics, so sales tax holds up better. In a different kind of downturn, when people get scared and stop spending, sales tax revenue drops fast — but if folks are still employed, income tax holds up better. Because the two taxes lean on each other, the state’s total revenue is steadier than either one alone.

That’s the three-legged stool. A stool with three legs stays standing even if the floor shifts. Take away a leg, and it tips over the moment the ground moves.

What Amendment 5 would do to the stool

Amendment 5 would phase out the income-tax leg and lean the state more heavily on the sales tax — the leg that tends to swing the most when people pull back on spending. Missouri also doesn’t have the kind of tourism- or natural-resource-driven tax base that helps some no-income-tax states get by without an income tax. The further the income tax falls, the more the state would be balancing on one leg, with less backup.

There’s an important point here that keeps this argument honest. You don’t have to prove that the sales tax is “worse” than the income tax for this to hold. In fact, which tax is steadier depends on the type of downturn — a jobs recession hits income tax harder, while a spending freeze (like the early weeks of COVID, when consumer spending fell sharply) hits sales tax harder. The point isn’t which leg is stronger. It’s that having two different legs is what keeps you upright. Amendment 5 would trade that protection for a bet that only one kind of downturn will ever come.

We’ve already lost one leg

This isn’t a far-off worry. Missouri already removed part of a leg. Last year, the state ended its tax on capital gains — the profit people make selling stocks and other assets — becoming the first state in the country to do so fully. That took out a real source of revenue. And it has cost more than the first estimate. That estimate was in the low hundreds of millions. Later projections climbed: the state’s budget director estimated about $500 million for this fiscal year, and one fiscal-note estimate ran as high as roughly $625 million (Missouri Independent, December 18, 2025). The exact number is disputed. But the estimates moved a lot, mostly upward — and that is itself the warning. The stool is already less steady than it was. Amendment 5 would remove a second, much bigger leg.

We’ve also seen, on a small scale, what happens when a wobbly leg gives way. This year, the part of school funding that rides on lottery, gaming, and cigarette money came up about $138 million short, and the state reduced funding by about $245 per student mid-year (Missouri Independent, April 23, 2026). That’s not proof of what Amendment 5 would do — it’s a different, earmarked pot of money. But it’s the stool tipping in miniature: a consumption-based source missing its forecast and reaching schools before they could adjust.

The bottom line

A mix of taxes protects schools because the taxes tend to fail at different times, not the same time. Amendment 5 would remove that protection and lean far more on one revenue source. For a state with no natural cushion — and for schools that can’t absorb a sudden shortfall — that’s a risky tradeoff, and we’ve already seen two previews of how the downside looks.

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What’s Certain, Promised, and Unknown?

CERTAIN	Missouri funds schools with a mix of taxes that respond differently to different downturns. Amendment 5 would phase out the income-tax portion. The capital gains leg was already removed last year.
PROMISED	Supporters say economic growth and a sales-tax swap will keep total revenue roughly stable.
UNKNOWN	Which kind of downturn comes next, how a more consumption-heavy system would hold up, and whether growth materializes — all unknowable in advance, which is the whole reason a mix is safer than a single source.

Sources: Missouri DESE school-funding reports; Missouri Budget Project; Missouri Oversight Division fiscal notes; state consensus revenue estimates. Figures are approximate; some 2025–26 numbers are preliminary pending final enacted totals. Full sourcing in our evidence library.

Paid for by Across the Aisle for Missouri Public Schools, AAMPS PAC, Jacque A. Cowherd, Treasurer