Let Kansas Make Foolish Development Bets; We Have Better Things To Do
The Associated Press has published an excellent article about the tax incentive border war in Kansas City.
According to the AP, Missouri and Kansas have committed more than $750 million in tax incentives and bonds to lure companies across the state line. That amount of taxpayer money is incredible to promise away in just five years. Perhaps even more incredible is that the former head of the Missouri Department of Economic Development (DED) openly told the AP:
You get to a point where you have to say we are wasting taxpayer money.
For once, I agree with someone associated with the DED. It is certainly nice for elected officials to be able to issue a press release and claim to have created jobs and investment. But that practice is a raw deal for taxpayers. Research has shown that state tax credits have a lousy track record of delivering on promises. And, Missouri taxpayers support this foolish practice at a cost of hundreds of millions of dollars in state tax credits.
Though he has promised in the past to try and rein in tax credits, our governor does not seem to quite get it. Missouri Gov. Jay Nixon told the AP:
I’m going to compete for jobs for our state, I’m not backing up on that. But I think that the real long-term solution is how do we get more out of the region as far as joint economic impact?
Here is an idea: If a company wants to leave Missouri because Kansas has promised it a ridiculous amount of money, like $100,000 per job, let it go. That is a poor use of taxpayer dollars, and when a company moves a few miles, its employees frequently stay where they put. Those employees will continue to own homes, shop, and pay taxes in Missouri.
There are better ways to make our state competitive. Let’s lower the corporate income tax. Why not reduce the state income tax?
The way to encourage economic growth throughout the state is to provide tax relief to all Missourians, instead of participating in a tax incentive game that helps politicians earn political points.
