Although the economic growth benefits of tax credits are easy to see, it’s harder to see their drawbacks. Looking more carefully at the evidence and applying basic economics shows that lowering tax rates across the board is much more efficient at encouraging growth than singling out a few credit recipients at the expense of everybody else.
Tuition tax credits are the most effective policy solution for parents with autistic children. Insurance mandates wouldn’t provide sufficient coverage for specialized education, and most public schools aren’t set up to treat autism. Tax credits would help all autistic kids without placing excessive burdens on individual school districts.
Tax credits may seem like a great idea to encourage growth by enticing firms to relocate to Missouri, but the reasoning used to support this type of development is almost certainly wrong. The higher marginal tax rates created by targeted credits actually eliminate more jobs than are created by the tax credit beneficiaries.
Counties in Missouri have for decades had the power to levy annual license fees on any public establishment that hosts a pool table. A holdover from earlier times when pool halls were seen as social ills, the tax remains in many areas today. This amounts to an endorsement of some types of recreational activities, and a punishment of others.
Officials who use tax credits as a plan to spur economic development tend to rely on discredited economic models. SB 1234 is one such bill, designed to attract “mega-projects” and spur related job creation. Such tax credits will cost taxpayers millions of dollars, without any reliable way of predicting relevant economic growth.
Successful societies and growing economies have always depended on efficient transportation. As cars have become more efficient, the fuel taxes used to fund the state’s highways have leveled off — but the transportation needs of the state have not. Other states have looked to the private sector to provide transportation infrastructure, as a means of augmenting gas taxes. The people of Missouri would be well-served if officials were to give this new paradigm strong consideration as the economy evolves. Public roads, funded by gas taxes, will be the primary model for transportation in Missouri far into the foreseeable future. However, the options that public-private partnerships facilitate should be a part of the discussion for future transportation projects and plans.
After rejecting rail transit proposals at the polls six different times, Kansas City voters approved a light-rail plan in November, 2006. This plan, however, has proven infeasible, with costs at least 50 percent greater than its promoters projected. Implementing the plan would require cutting bus service by as much as 40 percent. While the City Council formally repealed the plan in November, 2007, many people in Kansas City still believe that some form of light rail or streetcars would be worthwhile. A close look at other urban areas that have built light-rail transit during the past three decades offers many lessons for Kansas City transportation policymakers, demonstrating that rail transit is more likely to worsen congestion than solve it.
Tax credit programs have helped to reduce inequality of educational access in states where they have been adopted. In many cases, they have also helped save taxpayer dollars by lowering the per-student district costs of educating public school students. After the recent loss of accreditation of the Saint Louis Public School District, and several other metro-area districts, tuition tax credit programs offer a timely and effective way to help students and parents stuck in districts that are failing, or in receivership. This study looks at recent legislative efforts to reform Missouri's public schools, and surveys the results in other states that have adopted some form of tuition tax credit. The core of the study is its economic model, which calculates the effects that various implementations of a tuition tax credit might bring. If such a program were structured carefully, it could actually save the state money — in addition to providing greater access to improved educational opportunities for low-income families.
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.
This study examines the abuses of eminent domain when used for private profit in Missouri. Although many government officials believe that eminent domain is necessary for comprehensive development projects that will help stimulate the economy, authors Timothy B. Lee and Shaida Dezfuli focus on how eminent domain often hurts economic development by creating economic uncertainty and harming small businesses. Furthermore, it exacerbates poverty in inner city communities by destroying affordable housing and undermining community reform efforts. The study documents numerous examples of the negative impact that eminent domain has brought to local communities. It argues that the abuses will only worsen, until the Legislature passes a constitutional amendment that strengthens property rights in Missouri.
How Much Money Will It Take to Give America Good Schools?
On April 17, the Show-Me Institute co-sponsored a seminar by James Guthrie, Ph.D., addressing the question, "How Much Money Will It Take to Give America Good Schools?" We'll post video of the event as soon as it's available!
Check out Show-Me Daily, the Show-Me Institute's new blog, where we provide fresh news and views on Missouri public policy every day.
Eminent Domain Amicus Brief
On Nov. 29, the Show-Me Institute filed a brief of amicus curiae in the Missouri Supreme Court eminent domain case City of Arnold v. Homer Tourkakis. Read SMI's argument in favor of strong property rights.
From Equity to Adequacy to Choice
On Oct. 30, the Show-Me Institute sponsored a conference about issues associated with public school finance and educational adequacy lawsuits. Visit the conference website to view the agenda, read working papers, and browse bios of presenting academics.
