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What Is The Matter With Missouri?

by Brent Mead / /

Perhaps a harsh title, after all, GovernorNixon and the Missouri legislature are looking at ways to boost employmentand they are doing it in at least a nominally revenue neutral manner.

The jobs package being debated can be found in either SB2 or SB8. Both are being heard September 7, before the Senate Jobs and EconomicDevelopment Committee.

The rough basics are a $360 million proposal to create anaerotropolis plan at the St. Louis – Lambert Airport. About $300 million of thetax credit package would go towards incentivizing warehouse construction withthe bulk of the remainder going to carry-forward cargo operators. Other side projectsinclude expanding the Quality Jobs Program, which offers a tax credit forbusinesses who hire a net number of positions at a certain wage level. Alsoincluded is a credit for advertising for amateur athletic sports competitions.The entire package is financed by acting on last year’s Tax Credit ReviewCommission’s recommendations to sunset or eliminate about a dozen tax credits.

The problems with the package are numerous. TheShow-Me Institute covers the basics of the aerotropolis plan. In short, thetax credits would only apply to new warehouse construction, despite a glut ofunused storage capacity in the area. Furthermore, Missouri has not undertakenthe sort of long-term cost-benefit analysis necessary to adequately study suchan endeavor.

Some of the other new or expanded programs carry potentialfor abuse as well. In that same report, the Show-Me Institute highlights a casewhere LibertyMutual Group received $1.6 million in taxpayer subsidies under the QualityJobs Program despite laying off 45 employees and then offering to rehire those sameemployees at a lower wage.

However; all thatsaid, the real problem is that this proposal varies from the status quo only inwho the state has picked to be winners and losers. Governor Nixon’sproposal simply shifts the tax burden from one special economic class to a newspecial interest. All Missouri citizens and businesses should have the benefitsof a low tax burden, not just a select few.

If Missouri wants to compete globally and against itneighbors the state must look to lower this burden. Tennessee already has nostate income tax. Kansasand Oklahomaare looking at doing the same. ALEC’s Rich States, PoorStates highlights precisely why Missouri should go down this road. Overthe past decade, Missouri has experienced relatively lower economic growth, alower increase in tax receipts, and a lower growth in non-farm payroll.Tennessee’s smarter underlying tax structure led to these differences. If Missouricontinues to rely on out-dated thinking that targeted tax credits can outperformbroad based tax relief then it will continue to fall further behind.  

What is the matter in Missouri right now is the failure toseize an opportunity. The Missouri legislature can put an end to the governmentfavoritism and offer broad tax reform that brings real relief to taxpayers thatwill make the state more competitive in the long run.