The Tax Credit Problem Is Still A Problem

The state issued more than $400 million in economic development tax credits last year, as it did the previous year and the year before that. What did all these tax credit issuances get us?

The number of jobs shrunk and we have an economy that barely grew last year. Considering the other issues that face these tax credit programs, does anybody really think that the taxpayers are getting a good bang for their bucks?

Economic development tax credits interfere with the markets by trying to determine what the future of Missouri’s economy will look like. Monkeys throwing darts have a better chance of determining the future economic needs of Missouri than bureaucrats in Jefferson City.

Meanwhile, Kansas just took a chainsaw to its personal income tax. Starting in January, 191,000 small Kansas businesses will not be paying taxes on their income. How is Missouri going to stop the avalanche of small businesses (especially those in Kansas City) from stampeding across State Line Road, with more tax credits?

The state can carry on with the same game they have been playing (and losing) for years. Or it can try something new. Patrick Ishmael and I continue to express our view that eliminating the state’s corporate income tax would help the state catch up. Eliminating the state’s corporate income tax would benefit all Missouri corporations, not just those who happen to be politically favored. It would give Missouri a leg up on Kansas (which still taxes its C-corporations) and coupled with a phase-out of some state tax credits, would not harm state revenue.

Missouri faces a critical choice. It will either keep playing the development game or it will try something new. Ditching the corporate income tax is not the cure-all, but it would be a positive first step.