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State and Local Government / Budget and Spending

Left Behind

By Michael Rathbone on Feb 8, 2012

A recent Wall Street Journal article notes the increasing push from state governments to eliminate or reduce personal income taxes. This article reinforces a previous point the Show-Me Institute made that a state’s tax environment does not occur in a vacuum. A state’s position regarding taxes can decline compared to its neighbors, even if it keeps its tax rates the same. Missouri recently eliminated the corporate franchise tax and yet it still risks falling behind other states who are taking even bigger steps toward lowering their tax rates.

Missouri Gov. Jay Nixon takes great pride in not raising taxes to close the state’s budget shortfalls. However, where is the big push for income tax reform in the governor’s agenda? In the Executive Budget for fiscal year 2013, Nixon does propose, among other things, $4 million to provide loans or other investment tools to help high-tech businesses create jobs through the Missouri Science and Innovation Reinvestment Act (MOSIRA) and $10 million for the State Small Business Credit Initiative to increase the amount of private capital made available to small businesses. Yet, there is no push to cut taxes across the board and these spending initiatives sound like the same tired and retread policies the state has taken when it comes to economic development (they also are not very successful; Missouri ranks 49th out of 50 states in job creation).

Kansas is looking to cut taxes, so is Oklahoma, while Tennessee has no personal income tax. These states are making the RIGHT moves to be more competitive and business-friendly. The governor should follow suit.

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Michael Rathbone

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