House Joint Resolution 36 (2009), the “Fair Tax” bill, called for replacing personal and corporate income taxes with a broad, revenueneutral 5.11-percent sales tax. The legislation also called for a tax rebate to be disbursed on the first day of each month to qualified families in the state. In our view, Missouri’s economy would grow faster if HJR 36 were enacted. However, through a combination of misinformation, miscalculation, and the promotion of myths, HJR 36 was unfairly maligned.
Missouri and Tennessee are border states that resemble each other in many ways. Despite the states’ similarities, Missouri has historically been the more populous and prosperous of the two, owing in part to its size advantage and in part to historical factors. Throughout the 1900s, however, Tennessee’s population and economy have gradually caught up to Missouri's; its population is now about 5 percent larger than its neighbor to the northwest, it has a higher per-capita GDP, and its per-capita GDP now trails Missouri's by only a few percentage points. In order to evaluate why Tennessee’s economy has grown at a faster rate than Missouri’s, it is important to consider the impact of one of the most significant and enduring differences between the two states: macroeconomic tax policy.
The licensing of occupations in Missouri could be could be costing consumers more for some services. Although a nationwide survey by the Reason Foundation last year listed Missouri as the state with the fewest statewide occupational licensing requirements, many occupations are still subject to unnecessary restrictions on who may enter the profession. This drives up prices and can, in many cases, spur business owners to locate elsewhere. This case study focuses in particular on massage therapists. It compares the prices of massage therapy in Missouri, which licenses therapists statewide, and Kansas, which doesn’t. It looks at price comparisons in the metropolitan Kansas City market and compares Springfield to Wichita. The study documents how massage therapist licensing in Missouri leads to higher costs for consumers in Springfield, and leads to more businesses locating in on the Kansas side of the state line in Kansas City.
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.
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.
A long-awaited free-market step on the path to cover those without health insurance came out of Jefferson City on Friday. Gov. Matt Blunt signed HB 818, making Missouri the first state to permit pretax contributions from small business owners to their employees’ individually selected policies. Unlike other health care reform “solutions” that require more government intervention and bureaucracy—third-party or one-payer systems, employer mandates, tax hikes, and cost shifting—this law offers a common sense approach to health care reform.
