Missourians soundly rejected a plan to phase out the state income tax in August. But when voters head to the polls Nov. 3, they’ll see another measure on their ballot that aims to end taxes in the state.
If approved, Amendment 7 would establish the “Show-Me Prosperity Fund,” an endowment comparable to a sovereign wealth fund that would aim to end most state-imposed taxes in approximately 100 years.
“This is a long term pay-it-forward,” said state Rep. Colin Wellenkamp, who sponsored the legislation in the Missouri House.
Several states such as Alaska, Texas and New Mexico have similar investment funds owned by the state government.
However, Amendment 7 is unusual in that it proposes a fund that sets out to replace tax revenue instead of supplement it, according to Dr. Sirisha Naidu, chair and professor of economics at the University of Missouri-Kansas City.
What Missouri Amendment 7 would do
Amendment 7 will ask Missouri voters whether they want to establish a permanent public endowment that would invest state money for the purpose of eliminating taxes.The ballot title reads as follows:
“Shall the Missouri Constitution be amended to establish a permanent public endowment fund to support state government instead of taxing Missouri residents, prohibit the general assembly from appropriating or diverting the fund, and eliminate state-imposed taxes once the fund generates sufficient revenue to replace them?
State and local governmental entities estimate no costs or savings.”
A “yes” vote supports amending the state constitution to establish the “Show-Me Prosperity Fund” for the purpose of ending taxes.
A “no” vote opposes amending the state constitution to establish the “Show-Me Prosperity Fund.”
How Missouri Amendment 7 would work
Amendment 7 would establish a state-owned investment fund in Missouri. But the plan does not automatically allocate any money into that fund.
Rather, the Missouri General Assembly would be tasked with deciding how to bankroll it. Any money would be invested in exchange-traded funds tracking the stock performance of the S&P 500 index.
Many states finance their sovereign wealth funds with ongoing revenues from natural resources like oil or public lands. Wellenkamp says Amendment 7 was modeled on a one-time infusion of approximately $250 million, and it could generate “several trillion dollars” over 100 years.
Missouri is expected to face a budget shortfall in fiscal year 2028. To sustainably create the fund, Wellenkamp hopes the money will be set aside in smaller increments over time. Alternatively, it could be funded through an automatic revenue source that is yet to be determined.
“I think this is something that we have planned out with a lot of safety mechanisms,” Wellenkamp told KCUR’s Up To Date. “We want it to be risk-averse, and we want it to shield any kind of economic downturn.”
The money would be hard to take out once it’s been allocated. Lawmakers would have to ask voters to “raid” the fund before it’s matured.
The Missouri Budget Project, a center-left think tank, said Amendment 7 raises “too many unanswered questions” and risks taking money from state services, since no dedicated funding mechanism is outlined in the legislation.
Wellenkamp says he wouldn’t support any plan that risks state services.
“I got my own priorities in my city, right? I got disability services, I got paramedics, I got first responders that need funding, schools, I don’t want to put any of that at risk or receive a cut because of this,” he said.
The Tax Foundation, a center-right think tank, told The Beacon in February that if the state were to start using money from the fund, economic downturns could hit harder.
Naidu, professor of economics at the University of Missouri-Kansas City, shares that concern. She says recovering from the Great Recession and the COVID recession was only possible because of federal and state intervention.
“If the fund doesn’t do well in a particular moment, which (is) very likely during a recession or depression… then how will the government actually step in and provide the services that are needed for people to even exist and live and survive?” Naidu told KCUR’s Up To Date.
- Missouri state Rep. Colin Wellenkamp, R-St. Charles
- Dr. Sirisha Naidu, professor and chair of Economics, University of Missouri-Kansas City
