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Let's look at the average Missourian. The average Missouri family of four has an income of $63,847, 89% of the national average of $67,019. This profile consists of two wage-earners and two dependents. (Avg. MO salary per individual is $32,789). Without any deductions, a gross 6% state income tax takes out of that family $3830. The average family of four nationally spent $49,638 in 2007 including housing and insurance but not taxes or childcare. But that same family of four would only need to spend $31,000 on goods and services to end up paying the state $3875 in sales tax. At this point, the family is indifferent between a sales versus income tax. The typical budget pie at the $31,000 level would mean a food budget (in and out of the home) at $6500, $8500 for transportation (gas/new car/new transmission, etc.), $2500 entertainment, $3000 clothes and care (which for some families is low), and $8000 for "other" (new refrigerator, air conditioner, hot water heater, vacation to Branson, school supplies, letter jackets, golf clubs, lawn mowers, Christmas gifts, etc.). This doesn't include any housing, health care, repair services, donations, insurance premiums, local property taxes, tuitions, interest on credit cards [average family of four has $8000 in credit card debt], utilities, etc. Just easily taxable stuff. If the family spends more than $2583 a month, they are better off with the income tax instead of the sales tax. At some point, consumption will decline because of desire to save instead of pay a sales tax or because they can't afford much more. When they are no longer indifferent, they will stop spending and the state revenue will decline--and the revenue neutrality is gone, probably forcing the sales tax higher. This can be a vicious cycle.

Can the State of Missouri get the $9-billion it needs from this consumer profile? (The state currently has a shortfall of $200-345-million.) There are 5.8-million Missourians and 13% live below the poverty level of $22,000/family of 4; or 754,000 Missourians aren't going to pay any income tax due to poverty. Currently, there are 275,000 Missourians who are unemployed. These might be the same people; maybe, maybe not. There may be some overlap with kids, elderly, etc. These people don't tend to spend alot of money. It will be interesting to see how the pre-bate re-bate would work for someone just buying some snack food. Do you present your state credit card for exemption of taxes on your $2 purchase? Other guys in line are going to love him...Much like the food stamps person who wants to use them on some off-list product. To get to $9-billion at the 6% income tax rate, Missouri needs 4,687,500 average taxpayers ($1920/ind; $3840/family four w/ two incomes). About 789,000 are over 65 (13.6%--higher than the national average) and 24% are under 18, eliminating another 1,392,000, which gives us about 3,344,000 Missouri employees. We fall short by about 1,350,000 working people. Of course, the great unknown is the level of income of the over-65 demographic. Even if half have some sort of higher taxable income, we're still short about 1,000,000 wage-earners, about four times the number of unemployed citizens. In a perfect world of income tax only, we fall short. In a world of consumer taxation, we fall short at the 12.5% level of indifference. This could only mean that the consumer tax would have to be higher, unless it is supplemented by other taxes, just like the current income tax is.