Section 4(d). 1. In enacting any law imposing a tax on or measured by income, the general assembly may define income by reference to provisions of the laws of the United States as they may be or become effective at any time or from time to time, whether retrospective or prospective in their operation. The general assembly shall in any such law set the rate or rates of such tax. The general assembly may in so defining income make exceptions, additions, or modifications to any provisions of the laws of the United States so referred to and for retrospective exceptions or modifications to those provisions which are retrospective.

2. Notwithstanding any provision of this constitution to the contrary, the general assembly shall enact legislation to reduce and eliminate the state individual income tax by requiring reductions to the top rate of the individual income tax based on revenue growth until such tax is eliminated. Upon the elimination of the individual income tax, the general assembly shall be prohibited from enacting or imposing any state individual income tax.

Section 26. 1. In order to prohibit an increase in the tax burden on the citizens of Missouri, state and local sales and use taxes (or any similar transaction-based tax) shall not be expanded to impose taxes on any service or transaction that was not subject to sales, use or similar transaction-based tax on January 1, 2015.

2. (1) Notwithstanding any provision of this constitution to the contrary, including subsection 1 of this section, for the purpose of reducing and eliminating the state individual income tax and reducing local tax rates, state and local sales and use taxes (or any similar transaction-based tax) may be expanded by legislation to impose taxes on transactions involving any goods and services. For the purposes of this section, the phrase “for the purpose of reducing and eliminating the state individual income tax and reducing local tax rates”, with respect to legislation enacted by the general assembly, means that the legislation expressly states the general assembly’s finding that such legislation will directly lead to the reduction and elimination of the state individual income tax as provided in subdivision (2) of this subsection, and will directly or indirectly lead to the reduction of local tax rates as provided in subsection 3 of this section.

(2) Any expansion of the sales and use tax base or increase in the state sales and use tax rate enacted for the purpose of reducing and eliminating the state individual income tax and reducing local tax rates shall be offset in the same legislation by a reduction in the top rate of individual income tax that reduces such tax revenues, less refunds, by an amount that is at least substantially equal to revenues generated by such expansion of the sales and use tax base or increase in the state sales and use tax rate, and, if such legislation is enacted within five years of the effective date of this amendment, shall not be considered new annual revenue for the purposes of Section 18 (e) of this Article and shall be exempt from the provisions of Article IV, Sections 30(b), 30(c), and 30(d) of this Constitution.

3. (1) Notwithstanding any provision of this constitution to the contrary, beginning twelve months from the effective date for legislation in which the general assembly expands the sales and use tax base pursuant to subsection 2 of this section, any political subdivision that imposes a sales or use tax shall, in the manner provided by law enacted by the general assembly, make a one-time adjustment to one or more of the following rates of tax imposed by the political subdivision to reduce the amount of revenue generated thereby in an amount that is substantially equal to ninety-seven percent of the additional revenue produced by any expansion of the sales and use tax base authorized by this section:

(a) The sales and use tax rate; (b) The levy imposed on property in class 2; (c) The levy imposed on property in subclass (1) of class 1; (d) The levy imposed on all class 1 property if such political subdivision imposes a single rate of levy on all such property; or (e) The rate of any tax imposed on earnings.

(2) Notwithstanding the provisions of subdivision (1) of this subsection to the contrary, no political subdivision shall adjust its local tax rates in a manner that results in any reduction in funding to any public schools within, or serving, such political subdivision.

4. Notwithstanding any provision of this constitution to the contrary, beginning twelve months from the effective date for legislation in which the general assembly expands the sales and use tax base pursuant to subsection 2 of this section, each sales and use tax rate imposed directly by this constitution, with the exception of the rate imposed under Article XIV of this Constitution, shall, in the manner provided by law enacted by the general assembly, be adjusted in order to reduce the amount of tax in an amount substantially equal to the amount of tax produced by any sales and use tax base expansion authorized by this section. The state auditor shall be responsible for calculating the reduced rates that will go into effect as provided in this subsection.