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Michael Austin

When my mother was young, she decided to knit herself a sweater with her favorite flower, a daisy, on it. When she asked for some wool, my grandmother told her there was a bag of wool under the stairs. But when my mom opened the bag, all she found was a tangled mess of yarn from old scarves, sweaters, and blankets. In response to mom’s complaints, my grandmother said “All you need to do is to look for the easiest knot. When you undo that, the next knot will be easier. Keep going, and you’ll find all the wool unraveled.”

Sure enough, my mom started on the first knot, then the second and third, and once done, she started to knit. A pattern soon formed – a big, beautiful sweater with a daisy in the middle. At that point my grandmother turned to her and said “That sweater was in there the entire time—you just didn’t know where to look.

Show-Me Institute writers regularly advocate eliminating or reducing the tangle of economic development credits that so often waste taxpayer money without providing the promised benefits. However, we also understand that such an endeavor can seem overwhelming, and that problems can easily become knotted together. To simplify such a convoluted mess, it can help to break the work into small chunks and work on it a bit at a time.

The Missouri Department of Economic Development’s 2015 Annual Report lists the amounts issued for every incentive issued in Missouri. Instead of looking at ways to eliminate such incentives or even cap the total amount issued, another option could be to tackle these incentives one at a time. Policymakers can start with the incentive with the smallest amount issued and work up, or they can tackle the largest ones, like the Historic Preservation Credit, and work their way down. The important thing is to focus on each issue separately before moving on to the next one.

In 2010, a state tax credit review commission considered ways to create greater efficiency and return on investment through tax credit programs. In its report, the commission listed 28 programs that do not create “a justifiable benefit in relation to their cost to taxpayers.” This recommendation could mark a good place to start unraveling. The state tax revenue recovered by eliminating ill-advised credits could allow for a proven economic growth plan: a broad and fair tax cut.

About the Author

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Michael Austin
Policy Analyst
Michael Austin was a Policy Analyst at the Show-Me Institute specializing in state and local budgets, taxes, and economic growth. Michael graduated with a BBA in business management and economics from Washburn University in Topeka, Kansas, and holds an MA with honors in economics from the University of Kansas.