Missouri and around the country, elected officials, taxpayers, and financial markets have expressed concerns about the financial health of defined benefit pension plans for state and local government workers. Public employees also are concerned, as many rely heavily upon these plans for income in retirement.

State and local employees in Missouri typically are eligible to receive pension benefits upon retirement; the particular pension each worker is eligible for depends on the employer and the position. In this paper, we examine the return performance of five Missouri pensions ...

Local governments in Missouri are primarily funded by property taxes. Property taxes are an ad valorum tax, which means they are based on the value of the real estate or other property being taxed. Taxable property in Missouri is appraised at its market value, a ratio is applied to the market value to determine the taxable — or assessed — value, and a tax rate is then applied to that value determining the amount owed in taxes. Property taxes fund schools, counties, cities, fire districts, libraries, and other types of smaller taxing districts.

This study addresses an important issue with implications for public policy: retirement plans. It compares defined benefit (DB) and defined contribution (DC) retirement plans in order to assess whether the recent trend toward DC plans is, on balance, beneficial to workers. It further identifies policies — both public and private — that would make retirement plans more effective, with the goal of advancing liberty and responsibility.

It is widely believed that fiscal policy plays an important role in determining economic growth, but the specific policies that would best foster growth are hotly debated. This study provides a review of the recent economic literature that examines the effect of government fiscal policy actions on economic growth. Because the effect of changes in tax and spending programs may take a long period of time to become evident, the findings of the studies reviewed here are based on data taken from across a large sample of countries. Despite the justifiable belief that fiscal policy does influence economic growth, interpreting the empirical evidence from aggregate cross-country data turns out to be less than straightforward. Even so, stepping back and considering the accumulated evidence reveals a robust conclusion from the data: Distortionary taxes on personal income or corporations have a strong negative effect on investment and, therefore, slow the rate of economic growth.

This study provides a review of the academic literature that has examined the relationship between taxation and economic growth, with an emphasis on the taxation of income. The study provides reliable information that may inform policy options.

In February 2009, Congress dedicated $8 billion of stimulus funds to high-speed rail projects. In April 2009, President Barack Obama released his high-speed rail vision for America, which includes 8,500 miles that the Federal Railroad Administration had identified as potential high-speed rail routes in 2001. In June, the FRA announced its criteria for Missouri and other states to apply for high-speed rail grants out of the $8 billion in stimulus funds. Yet the FRA has no estimates of how much high-speed rail would ultimately cost, who would ride it, who would pay for it, and whether the benefits can justify the costs. A realistic review shows that high-speed rail would be extremely costly and would add little to American mobility or environmental quality.

The Missouri public pension system currently faces serious long-term financial challenges. Missouri taxpayers are facing compound problems regarding the state’s ability to manage effectively both defined benefit public pension and retiree medical liabilities. While current payments to retirees are not in jeopardy, the emerging cost patterns to both current and future members and taxpayers will be predicated upon future asset growth and favorable health care cost trends, both of which present significant risks to taxpayers.

This study considers the effects of eliminating Missouri's income tax, which would alter the state's tax structure in a way that encourages a wide variety of individuals and firms to relocate here. Evidence shows that this would not be detrimental to the growth of employment and income. Moreover, it may be possible to eliminate the income tax without sacrificing current levels of state services. Other states make up for lost income tax revenue in a number of ways, such as through higher property tax or sales tax rates. This study concludes that altering or even eliminating Missouri's individual income tax could well improve the state's economic condition.

If we can eliminate the distortions created by the earnings tax, jobs will be created and residents will flow into the city. My model takes into account the dynamic effects that the elimination of the earnings tax would have on migration and job creation. I find that at the end of the phase-out period, the revenue-neutral land-value tax rate would be 6.7 percent. The model predicts that Kansas City could eliminate the earnings tax in a revenue-neutral fashion over 10 years, replacing it with a 6.7 percent tax on the assessed value of land. The number of people working in Kansas City would increase by 50 percent in the long run. Replacing the earnings tax with higher sales taxes is not a viable option. Like the earnings tax, the sales tax is distortionary. Higher sales taxes will simply cause consumers to shop outside of the city. Although a land-value tax would be more costly to administer than the earnings tax, the economic gains of eliminating the earnings tax would be substantial.

If we can eliminate the distortions created by the earnings tax, jobs will be created and residents will flow into the city. My model takes into account the dynamic effects that the elimination of the earnings tax would have on migration and job creation. I find that at the end of the phase-out period, the revenue-neutral land-value tax rate would be 10.04 percent. The model predicts that in the long run, the number of people working in Saint Louis would double. Replacing the earnings tax with higher sales taxes is not a viable option. Like the earnings tax, the sales tax is distortionary. Higher sales taxes will simply cause consumers to shop outside of the city. Although a land-value tax would be more costly to administer than the earnings tax, the economic gains of eliminating the earnings tax would be substantial.

Although Missouri is a relatively low-tax state, its tax advantage has been declining in recent years. Today its tax burden is roughly on par with those of its neighbors. It’s not surprising that the state has had little success attracting new jobs and businesses. We believe that Missouri can do better. The nine U.S. states with no income tax offer a particularly appealing model. They have enjoyed enviable success in attracting jobs, investment, and new residents. If Missouri phased out its own income tax, it could “break away from the pack” of Midwestern states. It would then offer a compelling alternative for prospective businesses and families interested in moving to the region and would increase wealth and opportunity for all of its residents.

The typical minimum wage worker is young, still in school, living with a relative and living in a family that has a total family income of over $57,000. The typical poor worker is older, out of school, earning a wage substantially above $6.50 an hour, and the sole earner in a family with children. Most poor workers are poor because they work relatively few hours, not because they are paid low wages. The fact that minimum wage workers tend to look very different from poor workers suggests that increases in the minimum wage would have a limited impact on poverty. We estimate that an increase in the minimum wage would result in over 18,000 Missourians losing their jobs and would raise total labor costs for Missouri firms by $340 million. Increasing the minimum wage would reduce the overall poverty rate by less than 0.5 percentage points.

The evidence from a large body of existing research suggests that minimum wage increases do more harm than good. Minimum wages reduce employment of young and less-skilled workers. Minimum wages deliver no net benefits to poor or low-income families, and if anything make them worse off, increasing poverty. Finally, there is some evidence that minimum wages have longer-run adverse effects, lowering the acquisition of skills and therefore lowering wages and earnings even beyond the age when individuals are most directly affected by a higher minimum.

By adopting an earnings tax, a city gives businesses and residents an incentive to locate production outside the city. People go where they will obtain the highest after-tax return on their labor or investments. In order to raise the return, people locate more productive capacity outside the city limits in order to avoid the tax burden. This incentive effect can account for why the city share of per capita income is smaller in cities with earnings taxes than without. The bottom line is that city earnings taxes do matter. Cities that wish to increase their rate of economic growth should consider reducing or eliminating their earnings taxes.