Missouri is one of only three states that require a 10-percent minimum ethanol blend (E-10) for retail gasoline sold within the state. The Missouri Corn Merchandising Council (MCMC) recently released a study purporting to demonstrate the positive economic benefits of the state's ethanol mandate for Missouri consumers. The study claimed that Missourians will save more than $285 million through ethanol-induced fuel cost reductions in 2008 and nearly $2 billion in present value during the following decade. The MCMC study ignores important effects of the E-10 mandate, however, most notably the documented decrease in fuel efficiency of E-10 blended fuel and the taxpayer cost of ethanol subsidies. We find that accounting for these costs significantly impacts the MCMC savings projections and would result in a net loss to Missouri consumers of almost $1 billion during the next decade. If one were to consider the additional impact of the E-10 mandate on higher food prices and CO2 gas emissions, these costs would be even higher.
For 68 years, Missouri has selected its Supreme Court judges through a system of merit selection dubbed the “Missouri Plan.” Today, 26 states use some form of this plan, most having abandoned partisan judicial elections amid concerns about the effects of political pressure on a fair and evenhanded application of the law. Recent debates about this process in Missouri have instigated many proposals for changes. Because judicial independence is critical to a well-functioning legal system, this study will analyze judicial selection and its effect on the quality of courts.
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.
This study examines the privatization of pharmacy services in Saint Louis County. The author, Show-Me Institute policy analyst David Stokes, reviews trends in both the budget and actual expenses of county pharmacy operation, which show that before 2003, costs were rapidly rising — consistently outstripping budgeted figures. When the county opened a competitive bidding process for provision of pharmacy services in early 2003, costs began to drop dramatically. Since then, the county has spent less than it budgeted on the pharmacy every year, even as those budgeted amounts continue to decrease each year, in response to the significant cost savings. While this privatization was saving taxpayer dollars, it was also — more importantly — providing better pharmacy services to the people of Saint Louis County who used the health department clinics.
The Show-Me Institute commissioned a telephone poll of Missouri residents. Respondents reported a high level of dissatisfaction with public schooling in Missouri and little faith in the power of parents to change public schools for the better. When asked how well Missouri’s K-12 public schools are doing, just 12 percent of respondents believed the schools are “doing very well,” while 63 percent reported that public schools in Missouri are either “in a crisis” or have “serious problems.” Respondents were strongly supportive of proposals to provide tuition tax credits to families with children in private schools. Particularly significant is that while Missourians had only modestly positive views of the politicized term “school vouchers,” two-thirds of respondents embraced the notion that all families should be able to use public funds to send their children to a public or private school of their choice.
Joseph Haslag estimates the benefits of increased video competition to Missouri consumers, to state coffers, and to the state as a whole. He finds that increased video competition would benefit consumers by between $66 million and $76 million annually. On the other hand, incumbent cable companies would be harmed by between $45 and $53 million per year. On net, therefore, increased competition would benefit the state by more than $20 million per year. Franchise reform would also benefit the state if it attracted new infrastructure investments. Based on the experience of other states, Haslag estimate that new entrants would make $420 million in capital investments. If made in one year, that quantity of investment would generate roughly $17 million in additional state revenues the first year, and approximately $1 million annually in subsequent years.
There is anecdotal evidence that mayoral control can be more effective, with Boston, Chicago, and New York frequently touted as success stories. But Washington D.C. is an important reminder that all proposals for ‘mayoral control’ are not created equal. The record suggests that mayoral control can work, but only if it is sensibly designed and a strong mayor is actively engaged in improving the schools. If mayoral control is to be effective, the mayor must be willing to expend political capital and enlist the support of business and civic leaders on behalf of his reform agenda. Business and civic leaders, in turn, must be willing to hold the mayor’s feet to the fire, insisting that he set high standards for the district. Finally, mayoral control does not necessarily do anything to address the crippling legacy of rigidity and uniformity that infuses urban school management, staffing, compensation, and operations. It is only if the mayor is going to tackle these challenges that mayoral control may be worth the fight.
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.
