Michael Rathbone
Kansas, it seems, is not the only state intent on taking it to Missouri regarding tax cuts. Now Nebraska is looking to get in on the act. After already cutting taxes this year, Nebraska Gov. Dave Heineman is mulling various options to dramatically overhaul Nebraska's tax code. One option "on the table" is eliminating the state's personal income tax, which, if implemented, would make Nebraska and Tennessee our two neighboring states without an income tax.

So this is the situation Missouri faces. Kansas has dramatically cut its income taxes, including completely eliminating taxes on pass-through entities such as LLCs and sole-proprietorships. Tennessee has no income tax except on interest and dividends. The governor of Oklahoma is dead set on cutting income taxes even though she failed to get a tax cut through the legislature last session. Yet while many of our neighbors take steps to make their states more economically competitive, Missouri creates another tax credit review commission. (Do not get me wrong, I hope the commission succeeds in reducing our reliance on tax credits. But after the lack of any progress from the prior commission, I want to see actual action before I heap praise on it.)

If the biggest economic development item to get out of either house of the Missouri General Assembly is the Angel Investment Incentive Tax Credit then we are really in a sad state. We need to go bigger and stop relying on government economic planning. Yes, tax credits are government economic planning no matter what spin you try to put on them. My colleague Patrick Ishmael and I have proposed eliminating the state's corporate income tax. The Show-Me Institute also has conducted research on phasing out the state's income tax entirely.

This is a difficult time for Missouri. Our neighbors are racing ahead and putting us at a severe disadvantage. But there is still time to make changes. Missouri can compete with other states economically. It just takes the will to do so.

About the Author

Michael Rathbone
Policy Researcher
Michael Rathbone was a policy researcher at the Show-Me Institute. He is a native of Saint Louis and a 2008 graduate of Saint Louis University, where he earned a bachelor of science degree in biomedical engineering.